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How do externalities cause market failure?
Externalities can cause market failure if the full social costs and social benefits of production and consumption are not taken into account.
How does the market theory of wage determination reflect the forces of supply and demand?
True
When are negative externalities present?
when there has been a market failure
Why do Economists care about externalities?
Economists care about externalities because they represent costs or benefits incurred by third parties not directly involved in a transaction, leading to market failures. Externalities can distort resource allocation, resulting in overproduction or underproduction of goods and services. Understanding externalities helps economists design policies to internalize these effects, promoting efficiency and equity in the market. Addressing externalities is crucial for achieving optimal social welfare.
What is the economic term for the indirect effects of markets that are not corrected within the markets?
Externalities. A more proper definition for an externality is a transaction between two economic agents which affects a third, non-participating agent. Whether or not externalities are corrected for in a market is a matter of debate in economic theory.
How do property rights affect externalities and market failure?
Externalities and market failure will result from the difficulty of enforcing property rights.
How does the market theory of wage determination reflect the forces of supply and demand?
True
When externalities are present?
when there has been a market failure
How do externalities cause market failure?
Externalities can cause market failure if the full social costs and social benefits of production and consumption are not taken into account.
When are negative externalities present?
when there has been a market failure
How would a farmer's market reflect perfect competition?
The willingness of a farmer to sell at different prices regardless of demand will reflect perfect competition.
What do you understand by the term externalities and how can it be corrected in Nigeria economy?
Externalities is the positive (or negative) effect to the society due to consumption (production) of a good by an individual.The answer assumes that the externality in which Nigeria is facing is a negative externality. Ways to correct negative externalities are:Taxation: By increasing tax, we discourage production of such good, reducing negative externalitiesNegative advertising: similarily, this method aims to reduce demand for the said goodTradable permit: The best example for this is the "Cap 'n' Trade" scheme used by the United States government. This aims to reduce the amount of negative externalities year by year.Banning of that good: One can ban the production of that good and make it illegal (drug.) However, this is likely to create a parallel market (black market)
In the absence of externalities the middle hand leads a market to maximize?
total benefit to society from that market
Why do Economists care about externalities?
Economists care about externalities because they represent costs or benefits incurred by third parties not directly involved in a transaction, leading to market failures. Externalities can distort resource allocation, resulting in overproduction or underproduction of goods and services. Understanding externalities helps economists design policies to internalize these effects, promoting efficiency and equity in the market. Addressing externalities is crucial for achieving optimal social welfare.
What is the economic term for the indirect effects of market that are not corrected within the markets?
Externalities
What is the economic term for the indirect effects of markets that are not corrected within the markets?
Externalities. A more proper definition for an externality is a transaction between two economic agents which affects a third, non-participating agent. Whether or not externalities are corrected for in a market is a matter of debate in economic theory.
How do externalities impact the determination of the socially optimal quantity in a market?
Externalities can affect the socially optimal quantity in a market by causing a divergence between private costs and social costs. When externalities are present, the market may produce more or less than the socially optimal quantity, leading to inefficiency. This can result in overproduction or underproduction of goods and services, which can have negative impacts on society as a whole.
