Government Action
When the government subsidizes a certain product, it is likely because it produces this third party effect
Positive Externality
TYFYS. These Goods are both nonrival and nonexcludable
Public Goods
A company that can control the price of its product is said to have this
Market Power
Positive Externalities lead to this effect on production in a market
Underproduction
When one party in a transaction knows more than the other, this type of market failure occurs
Asymmetric information
When the government taxes polluters, it is trying to discourage these harmful effects on society
Negative Externalities
Do you like my new jeans? These goods are both rival and excludable
Private Goods
When a monopoly replaces a competitive market, output does this
It decreases
Negative externalities lead to this effect on production in a market
Overproduction
Paying a doctor per test ordered may cause this type of incentive problem
Moral Hazard
This is the governments role when it provides goods like national defense or public parks
Providing Public Goods
Club Goods
Owning all the diamond mines gives a company market power through this barrier to entry
Hard to duplicate inputs
The government responds to negative externalities with this action
Tax
Public Choice Economics assume politicians act this way, similar to firms and consumers
In their own self-interest
The US government does not perform this role in a free market system
Central Planning
This public road is too crowded! It is this good that is rival but not excludable
Common Good
When a monopoly raises prices above the efficient level, society experiences this effect to total surplus
Deadweight Loss
The government responds to positive externalities with this action
Subsidy
Analytical symmetry
Passing antitrust laws to prevent monopolies fulfills this government role
Promoting Competition
The public overuse of shared resources is known as this
The Tragedy of the Commons
A natural monopoly forms from large up-front costs and low marginal costs, a large corporation having low marginal costs is known as this
Economies of Scale
Is that Michael Jordan??? Mr. Bradford played 5 sports when he was in this grade
7th grade
When the market is misrepresented, or when an offer conveys negative information about a product (people hide information about poor quality good), it is called this
Adverse Selection