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Today's presentation
What is market failure?
Externalities
Solutions
Other kinds of market failure…read more

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What is market failure?
This definition comes up regularly!
It pays to define this term whenever it appears in the
question (just like other definitions)…read more

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Externalities…read more

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What they
are
Positive
Solutions and
Things negative
you need
to know
What
makes The
them diagrams
large/small…read more

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What are externalities?
Positive externalities
The costs or benefit
received by a third party
to an economic
transaction outside of the
Negative externalities
market mechanism; i.e.
the spillover effects of an
economic activity.…read more

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What things go in externality diagrams?
MSC, MPC, MSB,
Private = Social optimum
MPB
DWL Under/overproduction…read more

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Externality 1: a negative externality
MSC
Price
Deadweight welfare loss
MPC 1. MSC, MPC, MSB, MPB
Social optimum 2. Private =
P2
3. Social optimum
Private equilibrium
4. DWL
P1
5.…read more

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Externality 1: a positive externality
Price
Deadweight welfare loss MPC = MSC
1. MSC, MPC, MSB, MPB
2. Private =
P2 Social optimum
3. Social optimum
4. DWL
P1
Private equilibrium
5.…read more

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Comments

davidsalter

This 35 slide presentation covers all aspect of what market failure is, including the diagrams and goes onto analyse and evaluate the possible remedies.

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