Checklist for Market Failure

1) Do you know how people make decisions?

2) Do you know what it means by allocative efficiency?

3) Do you know the 4 main causes of market failure?

4a) Are you able to define these terms: private cost, private benefit, external cost, external benefit, public good, merit good, demerit good?

b) Are you able to give an example for each of the above term?

5a) Do you know what characteristics a public good has?

b) Do you know what each characteristic mean?

c) Can you give an example to illustrate each characteristic?

d) Are you able to explain why the government needs to provide public goods?

6a) Can you give examples of merit and demerit goods?

b) Are you able to explain why the government needs to intervene with regards to these goods?

7) Are you able to use diagrams to illustrate two cases where there's external cost and where there's external benefit?

8) Do you know the different steps to conducting CBA?

9) Do you know why the government wants to correct market failure?

10a) Do you know the different ways the government can deal with the problem of imperfect information?

b) Are you able to give examples?

11a) Do you know how the government can control monopoly power?

b) Are you able to give examples?

12a) Do you know how the government can control externalities?

b) Are you able to explain how they work?

c) Are you able to give examples?

13a) Do you know why income inequality is a problem?

b) Do you know how the government can intervene to solve it?



Well, 13 main points and you're quite there.