Edexcel Economics 3 Market Failure & Government Intervention

Description

Term

Where a government focuses on quick fixes to problems

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

Where both sides of the market have access to a similar amount of information

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

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

That the actions of consumers, producers, and governments will always have effects that are unintended or unanticipated

A benefit enjoyed by an individual or firm

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

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

A tax charged directly to an individual based on a component of income

Description

Term

What should a subsidy equal when there are external benefits?

A benefit enjoyed by a third party

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

The total of both private cost and external cost

The way in which the benefit of receiving a subsidy is divided between consumers and producers

What should a tax equal when there are external costs?

A good or service that a consumer can decide against using

A sudden event effecting an economy that is outside of a government's control

A tax levied on expenditure on goods or services such as VAT

Composed of both productive efficiency and allocative efficiency