Market Failure (Quizlet Revision Activity)

Here is a short matching terms quiz on aspects of market failure. Who can come top of the leaderboard?

We have created a playlist of market failure videos on the You Tube Channel - click here for the link!

Here are some key market failure terms to revise:

Asymmetric information

Occurs when somebody knows more than somebody else in the market.

Cartel behaviour

A group of firms that collude in order to increase their joint profits

Competition policy

Government policy and laws to limit monopoly power and prevent cartels

Deadweight loss

Loss in producer and consumer surplus due to an inefficient level of production

Externalities

Third party effects arising from production and consumption for which no appropriate compensation is paid

Fairness

A way to evaluate an allocation based on one's conception of justice

Free-riding

Benefiting from the contributions of others to some cooperative project without contributing oneself.

Incentive

Economic reward or punishment, which influences the benefits and costs of alternative courses of action

Lorenz Curve

A graphical representation of inequality of some quantity such as wealth or income

Market failure

When markets allocate resources in a Pareto-inefficient way.

Market power

Ability of a firm to influence or control the terms and condition on which goods are bought and sold.

Merit good

Goods and services that should be available to everyone, independent of their ability to pay.

Missing market

A market in which there is an exchange that would be mutually beneficial. This does not occur due to asymmetric or non-verifiable information

Occupational immobility

Barriers to moving easily between jobs

Oligopoly

A market with a small number of sellers, giving each seller some market power.

Pareto improvement

A change that at least benefits one person without making anyone else worse off.

Public bad

The negative equivalent of a public good

Public goods

Goods that are are non-rival and non-excludable

Spillovers

External effects of economic activity, which have an impact on outsiders who are not producing or consuming a product

Unintended consequences

Outcomes that are not the ones foreseen and intended by a government intervention