Term
| What are the reasons why the market might fail in efficiently allocating resources |
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Definition
| Externalities, public goods, imperfect information, inappropriate goods intervention, imperfect competition |
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Term
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Definition
| A side effect that occurs in industry in which neither the producer or consumer pays for. |
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Term
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Definition
| A good that is both non-excludable(you cannot prevent people from using it who have not payed for it), and non-rivalrous. Examples include police, firemen, communication |
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Term
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Definition
| when either the buyer or the seller knows too much or too little,thus providing an unfair advantage to one party. the unknown information can also cause health consequences. |
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Term
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Definition
| any market in which the sellers are selling different goods, or in which there is a small amount of sellers. |
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Term
| What is demand and what is it equal to? |
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Definition
| demand is the amount of a certain product an individual is willing to pay at a range of proces; marginal benefit |
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Term
| What area is the total benefit? |
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Definition
| the complete area underneath the MB line up until the desired Q* |
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Term
| What area in the graph is the consumer surplus? |
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Definition
| The triangle created by the |
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Term
| What is consumer surplus? |
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Definition
| it is the difference between the willingness to pay and the amount actually payed |
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Term
| What is the producer surplus? |
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Definition
| it is the triangle formed by the area above the supply curve, but below the cost.(it is beneath consumer surplus) |
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Term
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Definition
| producer surplus+consumer surplus |
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Term
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Definition
| The triangle formed underneath the supply curve. |
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Term
| Net benefit=total benefit-total cost |
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Definition
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Term
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Definition
| If the government intervenes in a market in a way that affects the market price and moves it away from the socially efficient price, then the outcome is a market failure. Example: roads provided by the US Forest Service. They may reduce the cost of timber extraction for private timber companies who lease public land. |
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Term
| What does efficient allocation maximize? |
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Definition
| efficient allocation maximizes the net benefit. |
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