Market Failure SAQ

The external costs or benefits that accrue to other individuals or society as a result of production or consumption.

Bees owned by a beekeeper pollinate the fruit of a nearby orchard.

When a factory releases toxic fumes into the atmosphere, causing poor health for nearby residents, the factory owner incurs no cost but others bear the cost.

<p>An individual wears a face mask to prevent infecting others.</p> Signup and view all the answers

<p>A non-smoker becomes ill due to passive smoking.</p> Signup and view all the answers

<p>The lack of incentive an individual or firm may have to guard against risk if they are protected from the consequences.</p> Signup and view all the answers

<p>Regulation of markets, such as by the Environmental Protection Agency.</p> Signup and view all the answers

<p>By using taxation to reduce pollution or grants/subsidies to encourage less pollution.</p> Signup and view all the answers

<p>It is illegal to sell tobacco to under-18s, and there is a high excise duty on tobacco.</p> Signup and view all the answers

<p>Prices are higher and quantity produced is lower, leading to less choice for consumers.</p> Signup and view all the answers

<p>It is when firms engage in anti-competitive behavior, such as price-fixing.</p> Signup and view all the answers

<p>Public footpaths and street lighting.</p> Signup and view all the answers

<p>Once a footpath is provided, it is not possible to exclude individuals from using it.</p> Signup and view all the answers

<p>One individual's use of a footpath does not take away from another person's use of it.</p> Signup and view all the answers

<p>Because they do not get provided by the market due to the inability to make people pay for their use.</p> Signup and view all the answers

<p>By using revenue from taxation to provide these goods and services.</p> Signup and view all the answers

<p>It is one of the regulators to help overcome market failure.</p> Signup and view all the answers

<p>Insurers charge higher premiums for all customers due to the lack of information about individual risk.</p> Signup and view all the answers