Micro Unit 6 Intro- Market Failures and the Government

Mr. Clifford provides an overview of microeconomics unit 6, focusing on market failures and the government's role. He explains how the free market can fail to allocate resources efficiently, leading to issues like public goods and externalities. The video covers the need for government intervention to provide public goods and regulate monopolies. It also discusses income distribution in a mixed economy and briefly touches on other economic concepts like asymmetric information and moral hazard.

What is a key reason the free market fails to provide public goods like education and national defense?

• They are only needed by a small portion of the population.

• They are too expensive to produce.

• They are non-excludable and non-rivalrous.

• They are not in demand.

How do externalities affect the production of goods in a free market?

• They eliminate the need for government intervention.

• They cause overproduction or underproduction.

• They ensure optimal production levels.

• They lead to perfect competition.

What is a potential consequence of monopolies in a free market?

• Increased competition

• Lower prices for consumers

• Destruction of competition

• Equal income distribution

In a mixed economy, how is income distribution typically managed?

• By allowing the market to decide

• Through government intervention

• By increasing competition

• By reducing taxes for the wealthy

Which of the following is NOT typically covered in the discussion of market failures?

• Perfect competition

• Public goods

• Externalities

• Monopolies