Market Failures (Grade 12 NSC Matric Economics): Flashcards
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Productive inefficiency
Productive inefficiency
Resources not used to produce max goods at lowest cost
Allocative inefficiency
Allocative inefficiency
Wrong mix of goods produced; not what consumers want/need
Pareto optimum
Pareto optimum
Can't increase one's welfare without making another worse off
Negative externalities effect
Negative externalities effect
Overproduction & underpricing of harmful goods
Positive externalities effect
Positive externalities effect
Underproduction of beneficial goods/services
Govt responses to negative externalities (3 methods)
Govt responses to negative externalities (3 methods)
Campaigns, taxes, laws/regulations
Govt encouragement of positive externalities (3 methods)
Govt encouragement of positive externalities (3 methods)
Subsidies, direct provision, advertising
Minimum wage effect
Minimum wage effect
Higher pay for workers but potential unemployment
Maximum prices (price ceilings) effect
Maximum prices (price ceilings) effect
Makes goods affordable but creates shortages
Minimum prices (price floors) effect
Minimum prices (price floors) effect
Protects producers' profits but creates surplus