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ECON1
WWW.AQUINASECONOMICSAS.CO.UK
@AQUINASECONOMIC
Market Failure
Answer all the questions below
1. Explain the seven cau...
ECON1
WWW.AQUINASECONOMICSAS.CO.UK
@AQUINASECONOMIC
7. Draw an externality diagram to show a positive externality
8. Expla...
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Market failure

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AQA, Aquinas, Economics, ECON1, Markets, Market Failure

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Market failure

  1. 1. ECON1 WWW.AQUINASECONOMICSAS.CO.UK @AQUINASECONOMIC Market Failure Answer all the questions below 1. Explain the seven causes of market failure 2. Define the following terms: a. Externalities b. Marginal Private Cost c. Marginal External Cost d. Marginal Social Cost e. Marginal Private Benefit f. Marginal External Benefit g. Positive Externalities h. Marginal Social Benefit 3. How is Marginal Social Cost calculated? 4. How is Marginal Social Benefit calcuated? 5. Explain in relation to the following industries how externalities are generated. Consider both positive and negative externalities in your answer a. Building of a Third Runway at Heathrow b. A Nuclear Power Plant c. Stepping Hill Hospital 6. Draw an externality diagram to show how over production will lead to negative externalities Market Failure A A A A
  2. 2. ECON1 WWW.AQUINASECONOMICSAS.CO.UK @AQUINASECONOMIC 7. Draw an externality diagram to show a positive externality 8. Explain using the terms Ex-ante and Ex-post why it can be diffciult to assess and judge the impact of externalities?

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