Market Failure Presentation
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Market Failure Presentation Transcript:
1.Market Failure
2.Meaning of market failure
An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers.
This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium
3.Public Good
A public good is often (though not always) underprovided in a free market because of its characteristics of non-rivalry and non-excludability.
Public goods have two characteristics:
Non-rivalry
Non-excludability
4.Merit Goods/private goods-
Merit Goods are those goods and services that the government feels that people left to themselves will under-consume and which therefore ought to be subsidised or provided free at the point of use.
Examples: Health services, Education, Work Training, Public Libraries, Citizen's Advice, Inoculations
Characteristic-
Excludable by seller
Rivalrous in consumption
5.Causes-
Abuse of monopoly power
Lack of public goods
Externalities
Problems of information
Regulations
Under provision of merit goods
Overprovision of demerit goods
Environmental degradation(explain sustainable devlpt)
Inequality in distribution of wealth
Immobility of factors of production
6.Externalities
Externalities are a loss or gain in the welfare of one party resulting from an activity of another party, without there being any compensation for the losing party.
Marginal Social Cost
Marginal Private Cost
Marginal Private Benefit
7.Types of Externalities
Negative externality of Production
Negative externality of Consumption
Positive externality of Production
Positive externality of Consumption
8.Negative externality of Production
Negative production externalities are the side-effects of production activities. As a result an individual or firm making a decision does not have to pay the full cost of the decision
9.Correction-
10.Negative externality of Consumption
Negative consumption externalities occur due to consumption of certain goods and services
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Market Failure Presentation Transcript:
1.Market Failure
2.Meaning of market failure
An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers.
This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium
3.Public Good
A public good is often (though not always) underprovided in a free market because of its characteristics of non-rivalry and non-excludability.
Public goods have two characteristics:
Non-rivalry
Non-excludability
4.Merit Goods/private goods-
Merit Goods are those goods and services that the government feels that people left to themselves will under-consume and which therefore ought to be subsidised or provided free at the point of use.
Examples: Health services, Education, Work Training, Public Libraries, Citizen's Advice, Inoculations
Characteristic-
Excludable by seller
Rivalrous in consumption
5.Causes-
Abuse of monopoly power
Lack of public goods
Externalities
Problems of information
Regulations
Under provision of merit goods
Overprovision of demerit goods
Environmental degradation(explain sustainable devlpt)
Inequality in distribution of wealth
Immobility of factors of production
6.Externalities
Externalities are a loss or gain in the welfare of one party resulting from an activity of another party, without there being any compensation for the losing party.
Marginal Social Cost
Marginal Private Cost
Marginal Private Benefit
7.Types of Externalities
Negative externality of Production
Negative externality of Consumption
Positive externality of Production
Positive externality of Consumption
8.Negative externality of Production
Negative production externalities are the side-effects of production activities. As a result an individual or firm making a decision does not have to pay the full cost of the decision
9.Correction-
10.Negative externality of Consumption
Negative consumption externalities occur due to consumption of certain goods and services
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