1.3.5 - Market failure

Why market failure occurs: too much or too little of a good is failure produced and/or consumed compared to the socially optimal level of output.

Use a - why market failure occurs: too much or too little of a good is failure produced and/or to connect the rule to the data and decision in the question.

This matters because a - why market failure occurs: too much or too little of a good is failure produced and/or determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - why market failure occurs: too much or too little of a good is failure produced and/or to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - Why market failure occurs: too much or too little of a good is failure produced and/or is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Sources of market failure:; externalities; the free-rider problem; non-provision of public goods; imperfect market information; moral hazard; speculation and market bubbles.

Use b - sources of market failure: • externalities • the free-rider problem; non-provision of to connect the rule to the data and decision in the question.

This matters because b - sources of market failure: • externalities • the free-rider problem; non-provision of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - sources of market failure: • externalities • the free-rider problem; non-provision of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Sources of market failure: • externalities • the free-rider problem; non-provision of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between private benefits, external benefits and negative social benefits. externalities.

Use a - distinction between private benefits, external benefits and negative social benefits. to connect the rule to the data and decision in the question.

This matters because a - distinction between private benefits, external benefits and negative social benefits. determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - distinction between private benefits, external benefits and negative social benefits. to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - distinction between private benefits, external benefits and negative social benefits. is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between private costs, external costs and social costs.

Use b - distinction between private costs, external costs and social costs to connect the rule to the data and decision in the question.

This matters because b - distinction between private costs, external costs and social costs determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - distinction between private costs, external costs and social costs to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - distinction between private costs, external costs and social costs is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between:; external benefits of production; external benefits of consumption; external costs of production; external costs of consumption.

Use c - distinction between: • external benefits of production • external benefits of to connect the rule to the data and decision in the question.

This matters because c - distinction between: • external benefits of production • external benefits of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - distinction between: • external benefits of production • external benefits of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - distinction between: • external benefits of production • external benefits of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The use of diagrams, using marginal analysis, to illustrate:; the external benefits from consumption; the external costs from production; the distinction between the market and social optimum positions; identification of the welfare loss or gain areas.

Use d - use of diagrams, using marginal analysis, to illustrate: • the external benefits from to connect the rule to the data and decision in the question.

This matters because d - use of diagrams, using marginal analysis, to illustrate: • the external benefits from determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - use of diagrams, using marginal analysis, to illustrate: • the external benefits from to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - use of diagrams, using marginal analysis, to illustrate: • the external benefits from is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The impact of externalities in various contexts:; transport; health; education; environment; financial.

Use e - impact of externalities in various contexts: • transport • health • education • to connect the rule to the data and decision in the question.

This matters because e - impact of externalities in various contexts: • transport • health • education • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply e - impact of externalities in various contexts: • transport • health • education • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: e - impact of externalities in various contexts: • transport • health • education • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between public and private goods: public goods; private goods: rival and excludable; public goods: non-rival and non-excludable.

Use a - distinction between public and private goods: public goods • private goods: rival and to connect the rule to the data and decision in the question.

This matters because a - distinction between public and private goods: public goods • private goods: rival and determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - distinction between public and private goods: public goods • private goods: rival and to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - distinction between public and private goods: public goods • private goods: rival and is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Why public goods may not be provided by the private sector making reference to the free-rider problem.

Use b - why public goods may not be provided by the private sector making reference to the to connect the rule to the data and decision in the question.

This matters because b - why public goods may not be provided by the private sector making reference to the determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - why public goods may not be provided by the private sector making reference to the to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Why public goods may not be provided by the private sector making reference to the is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between symmetric and asymmetric information. information.

Use a - distinction between symmetric and asymmetric information. information to connect the rule to the data and decision in the question.

This matters because a - distinction between symmetric and asymmetric information. information determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - distinction between symmetric and asymmetric information. information to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - distinction between symmetric and asymmetric information. information is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The significance of information gaps.

Use b - significance of information gaps to connect the rule to the data and decision in the question.

This matters because b - significance of information gaps determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - significance of information gaps to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - significance of information gaps is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How imperfect market information may lead to a misallocation of resources in various contexts:; healthcare; education; pensions; insurance.

Use c - imperfect market information may lead to a misallocation of resources in various to connect the rule to the data and decision in the question.

This matters because c - imperfect market information may lead to a misallocation of resources in various determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - imperfect market information may lead to a misallocation of resources in various to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - imperfect market information may lead to a misallocation of resources in various is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How moral hazard can occur.

Use a - moral hazard can occur to connect the rule to the data and decision in the question.

This matters because a - moral hazard can occur determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - moral hazard can occur to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - moral hazard can occur is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The impact of moral hazard on consumers, producers, workers and governments in:; insurance; banking.

Use b - impact of moral hazard on consumers, producers, workers and governments in: • insurance to connect the rule to the data and decision in the question.

This matters because b - impact of moral hazard on consumers, producers, workers and governments in: • insurance determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - impact of moral hazard on consumers, producers, workers and governments in: • insurance to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - impact of moral hazard on consumers, producers, workers and governments in: • insurance is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How market bubbles may arise. market bubbles.

Use a - market bubbles may arise. market bubbles to connect the rule to the data and decision in the question.

This matters because a - market bubbles may arise. market bubbles determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - market bubbles may arise. market bubbles to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - market bubbles may arise. market bubbles is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The impact of market bubbles on consumers, producers, workers and governments in various contexts:; housing; stocks and shares.

Use b - impact of market bubbles on consumers, producers, workers and governments in various to connect the rule to the data and decision in the question.

This matters because b - impact of market bubbles on consumers, producers, workers and governments in various determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - impact of market bubbles on consumers, producers, workers and governments in various to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - impact of market bubbles on consumers, producers, workers and governments in various is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.