1.3.1 Types Of Market Failure Flashcards
1
Q
What are the role of markets?
A
To allocate scarce resources
2
Q
What are the two types of market fail?
A
- Partial market failure
- Complete market failure
3
Q
What is partial market failure?
A
Where markets may lead to the overproduction or underproduction of goods
4
Q
What is complete market failure?
A
Where markets may not exist, leading to no production of a good or service
5
Q
What are externalities?
A
The effects that producing or consuming a good/service has on people who aren’t involved in the making, buying/selling and consumption of the good/service.
