Market failure and the role of government
In this unit, we start exploring the arguments for and against government intervention in an otherwise competitive market. We examine the conditions for allocative efficiency, using the marginal social benefit and marginal social cost principle, and the ways in which externalities, public goods, and the market distribution of income create market failures even in competitive free-market economies. In addition, we study the effectiveness of government policies such as subsidies, taxes, quantity controls, and public provision of goods and services, which are designed to correct market failures and achieve allocative efficiency.
This course contains 5 segments:
Socially efficient and inefficient market outcomes
In this lesson we begin to explore what happens when some of our assumptions about markets don't quite hold.
Externalities
In our initial analysis of markets we assumed that a supply curve captured all of the costs of production and the demand curve captured all of the benefits of consumption. But what if they don't? In this lesson we explore the concept of an externality: when costs or benefits impact someone outside of a market.
Public and private goods
Economists sometimes think about goods and services in terms of two defining characteristics: excludability and rivalry. In this lesson, we explore how these characteristics lead to four types of goods: private goods, public goods, natural monopolies, and artificially scarce goods (sometimes called "club goods"), and how markets are good at allocating some of these, but not great at allocating others.
The effects of government intervention in different market structures
In a previous lesson we saw that some forms of government intervention, such as price controls and taxes, reduced surplus and caused iniefficiencies. However, we assumed that such markets were perfectly competitive, and now we know that there are lot of other kinds of markets and considerations! In this lesson, we explore how government intervention might have different effects based on the presence of externalities or the market structure.
Inequality
Income inequality is when income in inequitably distributed. In this lesson, we explore how income inequality is measured.
Get a Reminder
Rating | Not enough ratings |
---|---|
Length | 5 segments |
Starts | On Demand (Start anytime) |
Cost | Free |
From | Khan Academy |
Download Videos | On all desktop and mobile devices |
Language | English |
Subjects | Business Social Sciences |
Tags | Economics-Finance-Domain AP Microeconomics |
Get a Reminder
Similar Courses
Careers
An overview of related careers and their average salaries in the US. Bars indicate income percentile.
Disease Intervention Specialist 3 $36k
Reading Intervention Tutor $38k
Prevention/Intervention Specialist $42k
Crisis Intervention $43k
Truancy Intervention Specialist $44k
Family Intervention Specialist 3 $45k
Intervention Tutor $47k
Academic Intervention Coordinator $48k
Intervention Counselor $50k
Coordinator of Early Intervention $51k
Intervention Specialist - CD $54k
President Intervention Specialist $162k
Write a review
Your opinion matters. Tell us what you think.
Please login to leave a review
Rating | Not enough ratings |
---|---|
Length | 5 segments |
Starts | On Demand (Start anytime) |
Cost | Free |
From | Khan Academy |
Download Videos | On all desktop and mobile devices |
Language | English |
Subjects | Business Social Sciences |
Tags | Economics-Finance-Domain AP Microeconomics |
Similar Courses
Sorted by relevance
Like this course?
Here's what to do next:
- Save this course for later
- Get more details from the course provider
- Enroll in this course