Grade 11 Market Failure

What is a perfect market?

• A market regulated by the government.
• A market controlled by a single firm.
• A market that supplies exactly what consumers demand.
• A market with high government intervention.

What is a merit good?

• A product with negative effects on consumers.
• A product with positive effects on society.
• A product with negative effects on society.
• A product that is over-consumed.

What is a demerit good?

• A product with positive effects on consumers.
• A product with negative effects on society.
• A product with positive effects on society.
• A product that is under-consumed.

What is a negative externality?

• A cost imposed on third parties.
• A benefit to consumers.
• A benefit to producers.
• A cost to producers.

What are private costs?

• Costs to society of economic activity.
• Costs to individuals of economic activity.
• Costs to firms of economic activity.
• Costs to others of economic activity.

What are social costs?

• Costs to firms of economic activity.
• Costs to others of economic activity.
• Total costs to society of economic activity (private plus external costs)

• Total benefits to society of economic activity.

What are external costs?

• Costs to individuals of economic activity.
• Costs to firms of economic activity.
• Costs to the third party not involved.

• Total benefits to society of economic activity.

What are private benefits?

• Benefits to society of economic activity.
• Benefits to individuals of economic activity.
• Total benefits to society of economic activity.
• Total costs to society of economic activity.

What are social benefits?

• Benefits to firms of economic activity.
• Private benefits plus external benefits

• Total benefits to society of economic activity.
• Total costs to society of economic activity.

What are external benefits?

• Benefits to individuals of economic activity.
• Benefits to firms of economic activity.
• Total benefits to society of economic activity.
• Benefits to third parties not involved.