1.4 Market Failure

A market failure is best described as

• The idea that market forces of supply and demand always provide the maximum benefit for society
• The idea that market forces of supply and demand do not always provide the maximum benefit for society
• The concept that a decision made by one party can have negative effects on another party
• The concept that a decision made by one party can have positive effects on another party

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.

• Common access resources

• Public goods

• Private goods

• Goods with negative externalities

Negative externalities can be best described as

• When the consumption/production of a good or service has a negative impact on a third party

• When the consumption/production of a good or service has any impact on a third party

• When the consumption/production of a good or service has a positive impact on a third party

• When the consumption/production of a good or service depletes the access for a third party

Selling your old computer on Amazon could be an example of

• Public goods

• Asymmetric information

• Common access resources

• Negative externalities

A large number of cars polluting the air could be an example of

• Consumption of common access resources

• Asymmetric information

• Negative externalities

• Public goods

Which is not an example of a public good?

• Street lights

• Local GP superclinic

• Bottled water

• Defence force

This image is an example of

• Common access resources

• Public goods

• Asymmetric information

• Negative externalities

Which of the following diagrams best represents the market for vaccines?

• 
• 
• 
• 

Which of the following diagrams best represents the market for sugary drinks?

• 
• 
• 
• 

What is a free market economy?

• a system where all economic decisions are taken by private individuals

• a system where economic decisions are taken by private individuals with only limited government intervention