MY LAB Chapter 16 Basic Functions of Government

monopoly of voilence

occurs when the government can control violence, but does not occur when there is organized crime as occurs in Colombia

adam smith asserted that the two duties of government are to

protect society from external harm and to protect members from being harmed by their own members

market failure

is a situation in which the free market in the absence of government intervention failr to achieve allocative efficiency

private marginal cost is made by

private decision maker

the marginal cost faced by the private decision maker plus any other costs imposed om third parties is known as _______. if there is a divergence between these two MCs then we can say that _____ are present

social marginal cost / externalities

the marginal benefit to consumers from using some good or service is known as

private marginal benefit

the marginal benefit to the consumers plus any benefits accruing to third parties is known as

social marginal benefit

an economic outcome is allocatively efficient when marginal social cost and marginal social benefit are

equal