Lesson Flashcards: Market Failure and the Role of the Government

A continual increase in the prices of goods and services over a long period of time

An economic system without a government’s involvement in which the main participants are households and firms

The change of ownership or management of a production process from the government to individuals

The societal problem where individuals seeking to provide their labor factor of production cannot find opportunities

A type of market failure in which relying only on firms for production leads to a level of consumption of goods that is insufficient to reach an optimal level for society, such as in the provision of education

The individual-owned production enterprises (firms) in an economy

The amount of goods and services consumers are willing to purchase at a given price

An inefficiency of a free market leading that, without government intervention, would lead to the wasted use of resources (for example, inadequate production of public goods such as public streets or national defense would require individuals to try to provide their own)

Goods and services that are excludable (other people can be prevented from consuming them) and rivalrous (sharing them reduces their benefits to others), such as a car

The process through which supply (producers) and demand (consumers) interact to determine the market price of a good or service