1. Market Failure ____
2. Externality ____
3. Negative Externality ____
4. Positive Externality ____
5. Marginal Social Costs (MSC) ____
6. Marginal Social Benefits(MSB) ____
7. Socially Optimal Amount (Output) ____
8. Internalizing Externalities ____
9. Coase Theorem ___
10. Rivalrous in Consumption ___
11. Public Good ___
12. Nonrivalrous in Consumption ___
13. Excludable ___
14. Non-excludable ___
15. Free Rider ___
16. Asymmetric Information ___
17. Adverse Selection ___
18. Moral Hazard
Column “C”
____A. A good whose consumption by one person doesn’t reduce its consumption by another person, that is, it is nonrivalrous in consumption but the same good can be excludable or nonexcludable.
____B. Information that either the buyer or the seller in a market exchange has & the other does not have.
____C. Anyone who receives the benefits of a good without paying for it.
____D. A side effect of an action that affects the well-being of third parties.
____E. A phenomenon in which the parties on one side of the market, who have information not known to others , self-select in a way that adversely affects the parties on the other side of the market.
____F. The condition when an individual’s or group’s actions impose a cost (adverse side effect) on others.
____G. A condition that exists when one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party.
____H. The sum of marginal private costs (MPC) and marginal external costs (MEC).
____I. A characteristic of a good whereby it is impossible, or prohibitively costly, to exclude someone from receiving its benefits after it has been produced.
____J. A situation in which the market does not provide the ideal or optimal amount of a good.
____K. The condition when an individual’s or group’s actions cause a benefit (beneficial side effect) for others.
____L. An amount that takes into account & adjusts for all benefits (external & private) & all costs (external & private); the amount at which MSB = MSC. Sometimes referred to as “efficient amount”.
____M. An externality is internalized if the persons or group that generated the externality incorporate into their own private or
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