Market Failure
cause of overconsumption of demerit goods
information failure
producer limits supply of products in the market to ensure products remain exclusive
tioingnar
rationing
perfect inelastic supply
fixed
Reason for PED to firm
revenue/consumer expenditure
all the stages of a product's progress from raw materials, production, and distribution until it reaches the consumer
supply chain
reason agriculture is considered a market failure
volatile weather w/uncertain supply
where decisions taken by buyers/sellers are determined by the price
llnaingsig
signalling
Productivity
positive YED
normal good
means of allocating resources in a market economy
price mechanism
The market failure associated with unfair allocation of resources
demand for good increases resulting in demand of labour increasing
edvired
derived
movement along the supply curve results in QS changing
quantity supplied
negative PED indicates
nothing, ignore
rent control government intervention
max price
2 Ways government can increase quantity of merit goods
subsidy and/or direct provision
price set above equilibrium
umiinm
minimum
availability of stocks, time, productive capacity
negative XED
expectations of future
A-level content pollution example market failure
externality
specific tax levied on goods such as cigarettes
isexsc
excise
Agriculture PES
inelastic
no relationship
income after taxes called
disposable