TAILIEUCHUNG - Lecture Essentials of economics (3/e): Chapter 5 - Brue, McConnell, Flynn

Chapter 5 - Market failures: Public goods and externalities. This chapter seeks to define a market failure and the consequences of a market failure. The chapter begins by looking at the demand side of market failures, the supply side of market failures, and the inefficiencies found. | Chapter 5 Market Failures: Public Goods and Externalities McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved This chapter seeks to define a market failure and the consequences of a market failure. The chapter begins by looking at the demand side of market failures, the supply side of market failures, and the inefficiencies found. It goes on to describe and show consumer and producer surplus. It defines and describes private goods, public goods, the free-rider problem, and quasi-public goods. It shows how to find the optimal amount of public goods the government should produce using a cost-benefit approach and finishes with a discussion of government failure. Market Failures Market fails to produce the right amount of the product Resources may be Overallocated Underallocated 5- Market failure occurs when the competitive market system produces the “wrong” amounts of certain goods or services, or fails to provide any at all. Resources are either overallocated to the production of the good or underallocated to the production of the good. Demand-Side Failures Impossible to charge consumers what they are willing to pay for the product Some can enjoy benefits without paying 5- Demand-side market failures occur because there are situations where it is impossible to charge all consumers, or any consumers, the price that they are willing to pay. For example: a public fireworks display. People don’t have to pay to enjoy the display. Private firms would be unwilling to produce outdoor displays as it will be impossible to raise enough revenue to cover production costs. Firm can’t prevent people from watching the fireworks if they didn’t pay. Supply-Side Failures Occurs when a firm does not pay the full cost of producing its output External costs of producing the good are not reflected in supply LO1 5- Supply-side market failures occur because there are extra costs associated with producing the good, but the .

• Kinh tế học
• Essentials of economics
• Lecture Essentials of economics
• International economics
• Product markets
• Market failures
• Public goods
• Economic perspective
• Marginal analysis
• Inverse relationships
• Independent variables
• Market system
• Circular flow
• Market equilibrium
• Law of demand
• Exchange rates
• Preset prices
• Price elasticity of demand
• Elasticity of demand
• Business population
• Corporation advantages
• Pure competition
• Market models
• Pure monopoly
• Monopoly demand
• Monopolistic competition
• Game theory overview
• Economic growth
• Gross domestic product
• Business cycles
• Economic cost of unemployment
• Aggregate demand
• Aggregate supply
• Fiscal policy
• Evaluating fiscal policy
• Financial institutions
• Federal Reserve
• Interest rates
• Monetary policy
• International trade
• Wage determination
• Labor demand
• Income inequality
• Poverty trends
• Opportunity cost
• Rational action
• Factors of production
• Optimal Mix
• Investment goods
• Government services
• Product market
• Locating markets
• Individual demand
• Market supply
• Consumer demand
• Sociopsychiatric explanation
• Total utility
• Marginal utility
• Supply decisions
• Marginal physical product
• Total profit