1.3.1 Types of Market Failure

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  • Created by: 13clarken
  • Created on: 22-04-19 12:17
... is when the allocation of goods and services by the free market is inefficient
Market Failure
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... is a problem because resources are wasted as they are not allocated properly so the market is inefficient
Market Failure
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... of markets: Competition leads to greater efficiency, Encouragement of innovation, Large variety of goods and services available, Encouraged economic activity and Freedom of individual choice
Advantages
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... of markets: Wealth generates more wealth, Environmental damage results with no government regulation, A reduced social safety net and Poor working conditions
Weaknesses
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Types of ... : Externalities, Under provision of public goods and Information failure
Market Failure
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Types of Market failure: Misleading prices lead to a difference between true prices and profits to society of economic activity. The market puts out the wrong signal, leading to a misallocation of resources
Externalities
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Types of Market Failure: ... of public goods: Failure to produce public-goods such as Defence, Street Lighting, Lighthouses and policing. The reason for this is the free-rider problem
Under provision
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Types of Market Failure: Assumptions of perfect markets include perfect knowledge, but consumers don't always have the full knowledge of what they are buying. Asymmetric information is another problem where either the buyer or seller has more info
Information gaps
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Other cards in this set

Card 2

Front

... is a problem because resources are wasted as they are not allocated properly so the market is inefficient

Back

Market Failure

Card 3

Front

... of markets: Competition leads to greater efficiency, Encouragement of innovation, Large variety of goods and services available, Encouraged economic activity and Freedom of individual choice

Back

Preview of the front of card 3

Card 4

Front

... of markets: Wealth generates more wealth, Environmental damage results with no government regulation, A reduced social safety net and Poor working conditions

Back

Preview of the front of card 4

Card 5

Front

Types of ... : Externalities, Under provision of public goods and Information failure

Back

Preview of the front of card 5
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