Market Failures
occurs when resources are not allocated efficiently, leading to a net loss of economic welfare.
What are Market Failures?
A financial incentive aimed at increasing production or consumption of a beneficial good.
What is a subsidy?
Non-excludability and non-rivalry.
What are the two key characteristics of public goods?
This curve represents the total cost to society of producing a good, including external costs.
What is the marginal social cost (MSC) curve?
A market structure characterized by many firms, identical products, and free entry and exit.
What is perfect competition?
Mr. M lived in this city for 3 years and enjoyed the great outdoors
What is Squamish?
Private firms do not take the additional costs on society into consideration during production.
Negative Externality of Production
A policy tool that restricts how much pollution firms are allowed to emit.
Because firms cannot exclude non-payers, they lack an incentive to produce them.
Why are public goods underprovided in a free market?
this point represents the inefficiently high level of output where only private costs are considered.
What is the Free Market Equilibrium?
A measure of how much quantity demanded changes in response to a change in income.
What is Income Elasticity of Demand (YED)?
Mr. M travelled to Australia with this sports team in high school
What is the Rugby team?
Cigarettes, alcohol, and sugary drinks.
What are examples of demerit goods?
The passing of laws to make consumption of a specific good compulsory.
What is Legislation?
People can benefit from a public good without paying for it.
What is the free-rider problem?
In a graph should the effects of beekeeping, the DWL would be a ________(shape) pointing to the _______ (direction)
What is a triangle pointing to the right?
as more units of a good are consumed, the additional satisfaction gained from consuming each additional unit decreases.
What is the law of diminishing marginal utility?
This is the name of Mr. M's father which starts with an 'H'
What is 'Hugh'?
making sure the person or company causing a problem (pollution) pays for it or the one creating a benefit (education) gets rewarded
What is internalizing the externality?
Building flood defences would be an example of this.
What is Direct Government Provision?
Fish in the sea are an example of this type of resource.
What are common pool resources?
In 15s, draw a negative consumption externality graph.
2 demand curves (MPB right of MSB), DWL pointing left
The area between the price a producer receives and the price at which they are willing to sell.
What is producer surplus?
In this country, Mr. M rode his bike along a scary road called 'Trampolin De La Muerte'
What is Colombia?
This type of externality occurs when the consumption of a good benefits third parties, leading to underconsumption in a free market
What is a positive externality of production?
A method used to influence consumer behavior by making harmful goods more expensive.
What is a Pigouvian tax?
when people overuse and deplete a shared resource (like fish) because they act in their own self-interest rather than conserving it for the group.
What is Tragedy of the Commons?
In 20s, draw a graph depicting the effects of deforestation
Negative production - 2 supply curves (MSC left of MPC), DWL points left
A government-imposed limit on how low a price can be charged for a good or service
What is a price floor?
This is the furthest distance Mr. M has run in a day
What is 100km's?