Market Failures & Role of Government

A beekeeper who produces honey helps the apple orchard next door because the extra bees help pollinate the apple trees. This an example of

• a. Positive Externalities

• b. Negative Externalities

• c. Vertical merging

• d. Collusion

An economic side effect of a good/service that generates benefits or costs to someone other than the person deciding how much to produce or consume.

• a. Side effects

• b. Public Goods

• c. Externalities

• d. Monopolies

A market failure is best described as

• a. The concept that a decision made by one party can have negative effects on another

• b. The idea that market forces of supply and demand always provide the maximum benefit for society

• c. The concept that a decision made by one party can have positive effects on another

• d. The idea that market forces of supply and demand do not always provide maximum benefit for society

A situation in which the market, on its own, doesn’t distribute resources effectively. Underproduction or overproduction of goods when producers or consumers do not have to bear the whole cost of their transactions. Sometimes when it’s hard to figure out who should pay. 

• Monopoly
• Public Good
• Market Failure 

A shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude nonpayers. Examples: Roads, mail, military. 

• Public Good
• Monopoly
• Market Failure 

Laws that encourage competition in the marketplace. They are needed because if they aren’t in place oligopolies and monopolies can form, which decrease output and increase prices to make a larger profit. 

• Anti monopoly laws 
• Anti trust laws
• Anti business laws 
• Anti Government laws

Which two government agencies can block mergers (when two companies combine into one) and ensure fair competition in the market.  

• Judicial Branch and Department of Homeland Security
• Federal Trade commission and Department of Justice
• Department of Trade and Department of Agricultural 

When the government loosens the reins a little bit and no longer decides what role/how much of a role a company can have in a market and how much the company can charge its customers. They let the market and competition determine prices, etc.

• Re-regulation 
• Un-regulation 
• Deregulation 

Laws that require companies to provide full information about their products. They ensure that consumers have all the information they need to make sure a smart purchase.

• Workplace Safety Laws
• FDA
• FTC
• Public Disclosure Laws

Sets regulations on workplace safety, conducts workplace inspections, and requires public disclosure of hazards to workers of different jobs like pesticides or asbestos. 

• Occupational Safety and Health Administration
• Workplace Safety Company 
• Department of Homeland Security