Lecture 3- Market failure (1)

One benefit about equilibrium when market is working is are allocated in most way- both (P=MC) & (P>MC) in long run

Another benefit about equilibrium when market is working is there is no requirement for which reduces &

Third benefit about equilibrium when market is working is are made. This benefits but ensure are rewarded

Fourth benefit about equilibrium when market is working is maximum &

Assumptions made relating to market is working include , no or dominates market, all & relate to buyer & seller, rapid or instant for both buyer & seller, no illusion & ignore concerns

Market failure- When leads to of in an economy

One type of market failure is . This is when &/ do not have about , & about good or service & are therefore unable to make decisions

Two types of imperfect information are & . is when there is in available to each of two parties involved in . is when one party lacks about of other party involved in

Another type of market failure is . This is when fails to create for good or service

can be related to missing market. It refers to people acting in their who overuse without considering this will lead to of that

Third type of market failure is . This refers to or to that is not involved in , & of good/service. There is difference between & costs & benefits

Merit goods- Goods that have to or as whole, as result of people or that good. Examples include & . For these goods, is greater than & therefore there is an of merit goods

Demerit goods- Goods that have to or as whole, as result of people or that good. Examples include & . For these goods, is greater than & therefore there is an of demerit goods

Fourth type of market failure is . These are that are , & . Marginal cost for are equal to . This leads to which is when person from good or service without for it