Topic 5: Market Failure - Externality Flashcards
(3 cards)
1
Q
Define market failure
A
Is a situation in which a market delivers and inefficient outcome.
2
Q
Inefficiency can occur because…
A
- Too little is produced - underproduction
* Too much is produced- overproduction
3
Q
When does a deadweight loss arise?
A
Deadweight losses arise when more or less of a good or service is produced than the efficient quantity.
It is a decrease in total surplus.
