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Definition
| Where the free market fails to achieve an efficient allocation of resources. |
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Definition
| When firms are not producing at minimum possible average cost. |
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Definition
| When resources are not used to produce the goods and services wanted by consumers. |
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Definition
| The use of government spending and taxation to meet economic objectives. |
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Definition
| When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. |
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Definition
| Negative spillover effects to third parties not involved with the consumption or production of the good. Social costs exceed private costs. |
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Definition
| The over-exploitation of natural resources that are not owned by single individuals or organisations. |
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Definition
| A right to emit a given volume of waste or pollution into the environment. |
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| An agreement made at a global summit meeting in Kyoto, Japan, to cut world carbon emissions. |
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Term
| Cost-benefit analysis (CBA) |
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Definition
| An investment appraisal technique that takes into account all the private and external costs and benefits of an economic decision. |
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Term
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Definition
| A price calculated to more accurately reflect the costs and benefits to society of a good, particularly where no market price has previously been calculated. |
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