6.1 Information Failures
When a buyer or a seller has more or better information than the other it is known as ___________________
What is asymmetric information?
Markets excel at providing an efficient amount of these
What are private goods?
What are public goods?
This economist proposed that private parties can negotiate solutions to externalities without government intervention
Who is Ronald Coase?
We would use this to correct a negative externality
What is a Pigouvian(per-unit) tax?
I wear a coat of gold,
And love a creamy bath,
You eat me with a fork, but I'm no salad path.
What is Mac n Cheese?
This type of information failure leads to firms having to choose from only risky customer pools
What is adverse selection?
These goods suffer from the free rider problem and will be underproduced by ______________
What are public goods and markets/firms?
This term describes the market failure that results from overconsumption/overuse of a common resource?
What is the tragedy of the commons?
This type of government intervention assigns property rights and allows for trading among the owners of the rights
What are trade-able permits/cap and trade?
When the party that creates the negative externality has to face the external cost, it is said that they are
What is internalizing the externality?
I gobble, but I cannot talk, A centerpiece for autumn's holiday walk. I'm roasted till I'm brown and deep, But never utter a peep.
What is turkey?
Information failures are common in these markets/industries
What is insurance?
This type of good is non-excludable and rival-in-consumption.
What are common resources?
The solution to the market failure for this good is to have it be produced by the government
What are public goods?
The laws that allow the government to prevent anticompetitive behavior among firms
What are Anti-Trust?
A Federal Judge recently ruled that this company is NOT a monopoly
What is Meta?
I'm a flavor that signals the end of fall, My spice blend is famous, loved by all. I sit in a crust, orange and sweet, A perfect slice, a holiday treat.
What is pumpkin pie?
This type of information failure results when the buyer changes their behavior AFTER their purchase, in a way that is detrimental to the seller
What is moral hazard?
Netflix is an example of this type of good
What is an artificially scarce/club good?
If people can be prevented from using a good, it can be said that good is _______________
What is excludable?
This regulatory agency promotes low prices, higher output and free entry and exit in markets and was created in 1914
What is the Federal Trade Commission?
This type of monopoly would be best handled by price regulation as opposed to forced break-up
What is a natural monopoly?
I start firm, then take a steamy plunge, I'm whipped and creamed into a soft, fluffy sponge. I'm often topped with a savory brown flow, A classic side dish that helps the dinner grow.
What are mashed potatoes?
Obamacare attempted to address the adverse selection problem in individual health insurance markets with this technique
What is individual mandates?
The optimal amount of a public good
What is where MSB = MSC?
Because people can be excluded from their games, and only one person can sit in a stadium seat, the tickets for Jets games are this type of good
What is a private good?
When governments implement rules that to address a market failure or negative externality it is known as _______________
What is command-and-control?
A Pigouvian subsidy would be useful in correcting this, especially if it were set equal to this
What is a positive externality and the marginal external benefit?
I am born from bread, herbs, and broth, then confined, A moist, savory puzzle inside something defined. Though I sit with the bird, I am truly distinct, And I'm often called dressing when outside I'm linked.
What is stuffing?