Market failure: public goods and information gaps

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Private goods
A good that once consumed by one person cant be consumed by another person.
1 of 7
Public good
a good that is non exclusive and non rivalrous.More than one person can consume it.
2 of 7
Free rider problem
When an individual cannot be excluded from consuming a good, and thus has no incentive to pay for its provision.
3 of 7
Assymetric information
A situation in which some participants in a market have better information about conditions than others.
4 of 7
Adverse selection
A situation in which a person at risk is more likely to take out insurance.
5 of 7
Moral hazard
A situaution in which a person who has taken out insurance is prone to taking more risk.
6 of 7
Merit good
A good that brings unanticipated benefits to consumers, such that society believs it will be underconsumed in a free market.
7 of 7

Other cards in this set

Card 2

Front

a good that is non exclusive and non rivalrous.More than one person can consume it.

Back

Public good

Card 3

Front

When an individual cannot be excluded from consuming a good, and thus has no incentive to pay for its provision.

Back

Preview of the back of card 3

Card 4

Front

A situation in which some participants in a market have better information about conditions than others.

Back

Preview of the back of card 4

Card 5

Front

A situation in which a person at risk is more likely to take out insurance.

Back

Preview of the back of card 5
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