Podcast
Questions and Answers
What is the situation called when the marginal private benefits (MPB) are equal to the marginal private costs (MPC) for an individual consumer or firm?
What is the situation called when the marginal private benefits (MPB) are equal to the marginal private costs (MPC) for an individual consumer or firm?
- Private efficiency (correct)
- Pareto optimality
- Social efficiency
- Market failure
When is social efficiency achieved?
When is social efficiency achieved?
- When MPB equals MSC
- When MSB equals MSC (correct)
- When MSB equals MPC
- When MPB equals MPC
What do economists describe as an improvement in social efficiency without making anyone worse off?
What do economists describe as an improvement in social efficiency without making anyone worse off?
- Market failure
- Pareto improvement (correct)
- Information asymmetry
- Monopoly powers
What is the failure of the market to allocate resources efficiently known as?
What is the failure of the market to allocate resources efficiently known as?
What leads to welfare loss for society according to the text?
What leads to welfare loss for society according to the text?
Flashcards
Private Efficiency
Private Efficiency
When the marginal private benefits (MPB) are equal to the marginal private costs (MPC) for an individual consumer or firm.
Social Efficiency
Social Efficiency
Achieved when marginal social benefits (MSB) equals marginal social costs (MSC).
Pareto Improvement
Pareto Improvement
An improvement in social efficiency without making anyone worse off.
Market Failure
Market Failure
Signup and view all the flashcards
Resource Misallocation
Resource Misallocation
Signup and view all the flashcards
