Lesson 26

Question 1

Non - rivalrous

Answer 1

Abundant

E.g. water

Question 2

Non - excludable

Answer 2

Once provided, can’t be taken away

Even if they have not paid for it

e.g. lighthouse

once it is built, it is impossible to prevent ships using it to navigate

Question 3

How does introducing a minimum wage cause people to lose their jobs?

Answer 3

Employer is paying people below the proposed minimum wage

Minimum wage introduced

Employer cuts staff to make up for this

Question 4

3 types of market failure?

Answer 4

Public goods

Externalities

Information assymetry

Question 5

When does market failure through information failure occur?

Answer 5

Occurs when economic agents do not have perfect knowledge

means they make decisions that do not maximise their profits/welfare/utility

Question 6

Example of serious information asymmetry? (US doctors)

Answer 6

Doctor tells a woman she needs a surgery

She lacks information symmetry

So agrees to it even though she might not need it

Benefitting the doctor financially

Question 7

Asymmetric information

Answer 7

A situation where info. is not being shared equally in a market transcation

Question 8

Merit good

Answer 8

A good which is beneficial to consumers and society as a whole

e.g. public transport

cheaper than owning a car + better for the environment (so better for society)