Market Failure

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If a good is non-rival and none-xcludable then it is known as a(n) _______ good.

Public

Public goods are distinguished by:

Non-excludability/Non-rivalry

The supply curve for any good, private or public is:

Its marginal-cost curve

A positive externality is an uncompensated spillover _______

Benefit

In performing its allocation function, government not only produces public goods:

But also corrects for market failures called externalities, or spillovers

The three options available to government in order to correct spillover benefits or the underallocation of resources are:

Government provision of public goods/Subsidies to producers/Subsidies to buyers

Government intervention may be needed to achieve:

Economic efficiency when externalities affect large3 numbers of people or when community interests are at stake

A ______ to a producer is a payment from the government to decrease the producers' cost in order to encourage more output of a product beneficial to society.

Subsidy

If a third party to a market transaction is experiencing an uncompensated cost, then the transaction results in a market failure known as a _______ or ________.

Spillover cost/negative externality

The _______ curve for positive externalities reflects only the direct private benefit to the individuals who consume the product.

Market demand

The marginal cost to firms and hence to society _______ as pollution is reduced more and more.

Rises

A positive externality is an uncompensated:

Spillover benefit

Suppose that the technology of pollution-control equipment improves noticeably. One would expect:

The optimal quantity level of abatement to rise/The cost of pollution abatement to fall/Society's marginal cost curve to shift rightward

_______ intervention may be needed to achieve economic efficiency when positive or negative ______ affect large numbers of people or when community interests are at stake.

Government/externalities

What good would be considered a rivalrous private good?

Tickets to a movie

What are examples of markets that are more likely to experience positive externalities?

Education/Health care/Immunizations

A cost or a benefit accruing to an individual or group, a third party, that is external to a market transaction is known as:

An externality

What goods could be classified as nonexcludable?

Environmental Protection Agency/Roads

The ______ curve for positive externalities reflects only the direct private benefit to the individuals who consume the product.

Market demand

Direct controls on pollution raise the marginal cost of production because:

The firms must purchase, operate and maintain pollution control equipment

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