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| A a situation in which the invisible hand pushes in such a way that individual decisions do not lead to socially desirable outcomes. |
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| When the government intervention in the market to improve the market failure actually makes the situation worse |
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| The effects of a decision on a third party that are not taken into account by the decision maker |
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| When the effects of a decision not taken into account by the decision maker are detrimental to others. |
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| The marginal private costs of production plus the cost of the negative externalities associated with that product |
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| The marginal private benefit of consuming a good plus the benefits of the positive externalities resulting from consuming that good. |
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| The amount of a good people are allowed to use is directly limited by the government |
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| Achieving a goal at the lowest cost in total resources without consideration as to who pays those costs. |
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| Achieving a goal in a more costly manner than necessary. |
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| A a program using a tax to create incentives for individuals to structure their activities in a way that is consistent with the desired ends. |
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| Charges imposed by government on the level of pollution created.. |
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Definition
| A plan requiring market participants to certify that they have reduced total consumption. Not necessarily their own individual consumption by a specified amount. |
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| Idividuals' unwillingness to share in the cost of a public good |
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| One in which the marginal cost of undertaking the policy equals the marginal benefit of that policy. |
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| A good that is nonexclusive (no one can be excluded from its benefits) and nonrival (consumption one does not preclude consumption by others). |
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| Adverse Selection problem |
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Definition
| A a problem that occurs when buyers and sellers have different amounts of information about the good for sale. |
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Definition
| An action taken by an informed party that reveals information to an uninformed party that offsets the false signal that caused the adverse selection problem in the first place. |
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Term
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Definition
| When the effects of a decision not taken into account by the decision maker are beneficial to others. |
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