Chapter 21 Market Failure vs Government Failure

Chapter 21 Market - Chapter 21 Market Failure vs Government Failure Market failure is a situation in which the invisible hand pushes in such a way

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Chapter 21 Market Failure vs Government Failure Market failure is a situation in which the invisible hand pushes in such a way that individual decisions do not lead to socially desirable outcomes Government failures when the government intervention in the market to improve the market failure actually makes the situation worse Externalities the effects of a decisions on a third party that are not taken into account by the decision maker Negative externalities which occur when the effects of a decision not taken into account by the decision maker are detrimental to others Positive externalities occur when the effects of a decision not taken into account by the decision maker are beneficial to others Marginal social cost includes all the marginal costs that society bears – or the marginal private cost of production plus the cost of the negative externalities associated with that production Externality represents an additional cost to society, marginal social cost curve lies above
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This note was uploaded on 02/23/2011 for the course ECON 2010 taught by Professor Moonjung during the Spring '09 term at UVA.

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Chapter 21 Market - Chapter 21 Market Failure vs Government Failure Market failure is a situation in which the invisible hand pushes in such a way

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