Alloc eff
Current combination of goods produced and sold gives the max satisfaction for each c/r at the current level of Y where P=MC
Non-excludable
impossible to exclude non-payers from consuming the good
Public Goods
non-rivalrous, non rejectable and non-excludable
Non-rivalrous
consumption of good by one or more consumers does not reduce the quantity available for others to consume
non-rejectable
consumers are unable to refuse consumption of a good
negative externalities
negative spill over effects to third parties from the consumption or production of a good
positive externalities
positive spill over effects on third parties generated from consumption or production of a good
imperfect info
asymmetric info
one party has more information than the other
factor immobility
inability of FOPs to shift from one country to another due to geographical or occupational boundaries
mkt failure
the free market fails to achieve alloc eff, resulting in societal’s welfare not being maximised
inequity
unfair distribution of wealth throughout the population
Govt failure
Govt intervention results in ↑mkt inefficiencies than if they didnt intervene
occupational immobility
mismatch b/w worker’s skills and job requirements.
geographical immobility
lack of ability/willingness for workers to relocate to areas where there is rising DD and shortages of labour.
Assym info
refers to a situation where one party in an economic transaction has more information than the other party and works actively to exploit that info asymmetry to his/her advantage
