Microeconomics, Market Failure - Assignment Essays %

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Private good

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any good or service that is rivalrous and exludable

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Nonexcludab;le

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when some people cannot be prevented, or excluded, from consuming a good or service

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Positive externalities

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governments may use public policy to encourage the production of goods to generate this

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Nonrivalrous

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when the consumption of a good or service by one person does not diminish the amount available to someone else

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Many of the goods that generate negative externalities are taxed by the government, such as:

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1. cigarettes
2. gasoline
3. alcohol

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Private demand

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the demand for a good or service that considers only the private benefits of its consumption

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Private marginal benefit

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the benefit to the consumer of an additional unit of a good or service

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a private company cannot provide____ goods, because it does not have the ability to force people to pay for a good or service by collecting____

answer

public, taxes

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Externality

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the benefit enjoyed by or cost imposed on a third party that is not directly involved in the production or consumption of a good or service

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Excludable

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if some people can be prevented or excluded from consuming a good or service

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Public goods are:

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nonrivalrous and nonexcludable

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Sometimes private markets can successfully provide:

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public

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Social marginal cost

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is the cost to society of producing an additional unit of a good or service

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the benefits of taxing a product with a negative externality include:

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1. additional tax revenues that can be used to help clean up the damage caused by the externality itself
2. a reduction in the damage to people outside the market
3. a reduction in the quantity traded in the market

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social demand is:

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the demand for a good or service that reflects both the private and external benefits of its consumption

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a negative externality is:

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the uncompensated cost of an activity that is imposed on a third party

1 of 16

question

Private good

answer

any good or service that is rivalrous and exludable

question

Nonexcludab;le

answer

when some people cannot be prevented, or excluded, from consuming a good or service

question

Positive externalities

answer

governments may use public policy to encourage the production of goods to generate this

question

Nonrivalrous

answer

when the consumption of a good or service by one person does not diminish the amount available to someone else

question

Many of the goods that generate negative externalities are taxed by the government, such as:

answer

1. cigarettes
2. gasoline
3. alcohol

question

Private demand

answer

the demand for a good or service that considers only the private benefits of its consumption

question

Private marginal benefit

answer

the benefit to the consumer of an additional unit of a good or service

question

a private company cannot provide____ goods, because it does not have the ability to force people to pay for a good or service by collecting____

answer

public, taxes

question

Externality

answer

the benefit enjoyed by or cost imposed on a third party that is not directly involved in the production or consumption of a good or service

question

Excludable

answer

if some people can be prevented or excluded from consuming a good or service

question

Public goods are:

answer

nonrivalrous and nonexcludable

question

Sometimes private markets can successfully provide:

answer

public

question

Social marginal cost

answer

is the cost to society of producing an additional unit of a good or service

question

the benefits of taxing a product with a negative externality include:

answer

question

social demand is:

answer

the demand for a good or service that reflects both the private and external benefits of its consumption

question

a negative externality is:

answer

the uncompensated cost of an activity that is imposed on a third party

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