| A | B |
|---|
| externality | Environmental pollution is an example of negative _____. |
| nonexcludability | Non-payers cannot be excluded from consumption. |
| public good | There is no market for such a good. |
| pareto optimality | No alternative resource allocation can make someone else better off without someone else being made worse off. |
| merit | A _____ good has positive effects on society. |
| demerit good | A _____ good has adverse effects on society. |
| deadweight loss | Welfare loss to society is also known as _____. |
| positive | Third parties benefit from the consumption or production of a good with _____ externality. |
| overproduction | A case when too much of a good is available. |
| underproduction | Too few resources allocated to the production of a good leads to _____. |
| monopoly | An example of market imperfection. |
| allocative | _____ efficiency occurs when P = MC. |
| productive | _____ efficiency occurs when firms produce on the LRAC curve. |
| price | _____ Acts as both a signal as well as motivation. |
| market failure | When the market mechanism fails to allocate resources efficiently. |
