Factor Markets and Market Failure & Role of Government
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15 Terms
Derived Demand
Demand for resources depends on demand for final goods.
Marginal Revenue Product (MRP)
Extra revenue from hiring one more input
Labor Market Equilibrium
Where labor demand meets labor supply.
Externalities
Costs/benefits spill over to third parties.
Negative Externality
Cost to society (pollution).
Positive Externality
Benefit to society (education).
Marginal Social Cost (MSC)
Total cost to society from production.
Marginal Social Benefit (MSB)
Total benefit to society from consumption.
Public Goods
Non-rival and non-excludable (national defense).
Private Goods
Rival and excludable.
Free-rider Problem
People benefit without paying for public goods.
Antitrust Policy
Government actions to prevent anti-competitive behavior.
Regulation
Government rules to correct market failures.
Lorenz Curve
Shows income distribution.
Gini Coefficient
Measures inequality (0 = equal, 1 = total inequality).
Note 
Flashcards (33)