MARKETS and MARKET FAILURE



EXTERNALITIES

Private + External = Social

Externalities are

| |Private |External |Social |

|Costs |Benefits |Costs |Benefits |Costs |Benefits | |

Definition

| | | | | | | |

Power Station

| | | | | | | |

Housing

| | | | | | | |

NEGATIVE EXTERNALITIES

What are negative externalities?

Give 5 examples of goods or services that have negative externalities

1) See Article on meat

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Draw a diagram showing negative externalities in production. Explain the diagram.

Draw a diagram showing negative externalities in consumption (Demerit goods). Explain the diagram.

POSITIVE EXTERNALITIES

What are positive externalities?

Give 5 examples of goods or services that have positive externalities

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Draw a diagram showing positive externalities in production. Explain the diagram.

Draw a diagram showing positive externalities in consumption (Merit goods). Explain the diagram.

Your diagrams can be checked here

Read through this essay on market failure in education

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