Edexcel Economics 3 Market Failure & Government Intervention

Description

Term

Where resources are distributed in a way that maximises consumer satisfaction, and where the price of a product is equal to the marginal cost of producing it

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

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

Where governments set maximum or minimum prices

A price above which producers cannot charge for their product

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

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

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

A tax that falls uniformly upon all consumers thus taking a larger percentage of income from low-income earners than from high-income earners

What should a tax equal when there are external costs?

Description

Term

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

Where the social benefits of production and/or consumption exceed the private benefits

Where the implementation of one government policy will adversely affect another

Where a person is more likely to selectively engage in trades that benefit them the most to others' disadvantage

Where a functional market produces at the wrong quantity or price

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

Where social costs exceed social benefits

The branch of economics that combines a psychological approach with traditional models to understand decision making and its effects on economic participants

A benefit enjoyed by an individual or firm

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