Edexcel Economics 3 Market Failure & Government Intervention

Description

Term

Where consumption of a product cannot be made dependent on payment thus giving firms little or no incentive to produce it

Where a person is willing to take more risks because someone else must bear the costs

A price above which producers cannot charge for their product

A positive or negative externality that is caused by the demand side of the market

A good or service that is semi non-rivalrous and semi non-excludable, like wifi, the signal of which may become slower as more people use it

A good or service that a consumer can decide against using

Attempting to deal with an externality by absorbing its external costs and benefits into the price system

A payment made by the government to a supplier of products that are considered to be essential or which provide beneficial effects

A good or service that a consumer cannot decide against using due to collective supply

What should a tax equal when there are external costs?

Description

Term

Where there is an optimal allocation of inputs producing maximum output for minimum cost

Where the social costs of production and/or consumption exceed the private costs as a result of no appropriate compensation being paid

Where circumstances may change between the recognition of a problem and the designing, and implementation of a policy

The total of both private benefit and external benefit

The difference in area between the pre-tax surplus and the post-tax surplus on a demand and supply curve

Who shoulders the greater tax burden when demand is relatively inelastic?

An indirect tax or subsidy levied at a percentage of the pre-tax or pre-subsidy price causing a non-parallel shift in the supply curve

A misallocation of resources arising from government intervention

The term for the amount of tax absorbed by both consumers and producers

The cost incurred by an individual or firm as a result of its activities but which is borne by a third party