Presentation is loading. Please wait.

Presentation is loading. Please wait.

Click to begin. Public Goods Externalities Unfair Distribution Of income Resource Market Failures 10 Point 20 Points 30 Points 40 Points 50 Points 10.

Similar presentations

Presentation on theme: "Click to begin. Public Goods Externalities Unfair Distribution Of income Resource Market Failures 10 Point 20 Points 30 Points 40 Points 50 Points 10."— Presentation transcript:


2 Click to begin.

3 Public Goods Externalities Unfair Distribution Of income Resource Market Failures 10 Point 20 Points 30 Points 40 Points 50 Points 10 Point 20 Points 30 Points 40 Points 50 Points 30 Points 40 Points 50 Points Monopolies

4 What makes public goods market failures? A.Incentive to provide public goods by the public sector B.The government is inefficient and cannot provide public goods C.Free rider problem D.Businesses are making too much profit from the consumer demand that they are not meeting.

5 C. Free rider problem The private sector does not have any incentive to produce these goods since the free-rider problem makes these goods unprofitable.

6 What are free riders?

7 Free riders are people who benefit from a public good without paying for it.

8 Who produces public goods and why?

9 The government produces public goods because if the production of these goods was left to just the private sector, there would be underproduction since there is a lack of incentive.

10 What are the two characteristics of a public good? Give an example of a public good.

11 A public good is defined by nonexcludability and nonrivalry (shared consumption). Examples include: national defense, streets, parks, the ocean

12 What concept of public goods does this picture represent?

13 This represents the common pool problem. When a good is offered to all in the public, there is no incentive to pay for or maintain that good.

14 What type of externality has MSC above the free market equilibrium?

15 Negative

16 What are the two ways that a government can remedy a positive externality?

17 The government can give a subsidy to the consumers or to the producers, thus increasing quantity to the socially optimal level.

18 A paper making factory pollutes the lake it is next to. To correct this the government does what? Graph this externality and decide how to correct this problem. TEAM TASK

19 A per unit tax On producers

20 When a product has a positive externality, its quantity in the free market creates a _____. A.Surplus B.Shortage C.Lower demand D.Greater supply


22 What does the free market fail to take into account, thus resulting in a market failure?


24 Why are monopolies considered a market failure?

25 They are not productively or allocatively efficient and there is no competition in the free market.

26 What is the purpose of antitrust policies?

27 To prevent monopolization, promote competition, and achieve allocative efficiency

28 1. Allocative Efficiency 2. Imperfect competition 3. Marginal Cost 4. Productive Efficiency 5. Barriers to Entry Password Choose two players and one referee.

29 Why is taxing a monopoly a bad idea?

30 Taxing raises the MC curve and lowers the quantity produced.

31 Identify and define the three types of mergers

32 Horizontal merger between firms with similar products, vertical merger between firms with a buyer-seller relationship, and conglomerate merger between firms of different industries

33 The Lorenz Curve demonstrates what? A.Income Inequality B.Tax rates and returns C.Government efficiency D.Monopoly profit

34 A. Income inequality

35 Economists today agree that US is currently operating at what point in the Laffer Curve? A.At point M B.Above Point M C.Below Point M D.At zero E.At 100

36 C. Below Point M

37 What is the Gini Ratio in respect to “A” and “B”?

38 ____A______ A+B

39 Describe the 3 different types of taxes and identify which one of them reduces income inequality.

40 A progressive tax (reduce inequality) takes a higher percentage of income from high income groups. A proportional tax takes the same percent of income from every income group. A regressive tax takes a higher percentage of income from low income groups.

41 When supply is inelastic and demand is elastic, who pays more of the tax? When supply is elastic and demand is inelastic, who pays more of the tax? What if demand is perfectly elastic?

42 Producer Consumer

43 What is the curve that shows the relationship between tax rate and tax revenue?

44 Laffer Curve

45 The sriracha company produced the sriracha sauce without realizing that the foul smell was disturbing the people living near the factory. What type of externality is this, which curve (demand or supply) will show this externality and how should the government react?

46 Negative externality that shifts the supply/MPC to the left (becomes MSC) & the government should tax producers

47 The polo market accidentally became a monopoly and is making a profit. Draw and label a graph of a monopoly and explain why it is a market failure. TEAM TASK

48 They are not productively or allocatively efficient. They charge too high and produce too little.

49 If a good creates a positive externality, what should the government do (tax or subsidize) and who should it be placed on (producers or consumers) so that the socially optimal price is the lowest possible?

50 A subsidy on producers

51 Timed Task Place the following items in a table to demonstrate which are pure public goods and pure private goods: A.National defense B.Street lights C.Hair cut D.The Hudson River E.Fishing F.Hot dogs G.Fireworks H.Computers

52 Shared consumptionRivalry NonexclusionNational defense Street light Fireworks Hudson River Fishing ExclusionHot dog Haircut Computers

53 How long was Kim Kardashian married to Kris Humphries?

54 72 DAYS!!!

55 Who won the Oscar for the best song of 2014?

56 Pharrell William for “Happy”

57 The three starters from Pokemon’s first generation are?

58 Bulbasaur, Charmander, and Squirtle

59 What movie is this from? Daily Double If you get it correct, you can take and additional 20 points from another team

60 Titanic

61 What is the maximum score you can get on an AP test?


Download ppt "Click to begin. Public Goods Externalities Unfair Distribution Of income Resource Market Failures 10 Point 20 Points 30 Points 40 Points 50 Points 10."

Similar presentations

Ads by Google