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14.6: Key Terms

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    108455

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    Market failure defines outcomes in which the allocation of resources is not efficient.

    Public goods are non-rivalrous, in that they can be consumed simultaneously by more than one individual; additionally they may have a non-excludability characteristic.

    Efficient supply of public goods is where the marginal cost equals the sum of individual marginal valuations, and each individual consumes the same quantity.

    Asymmetric information is where at least one party in an economic relationship has less than full information and has a different amount of information from another party.

    Adverse selection occurs when incomplete or asymmetric information describes an economic relationship.

    Moral hazard may characterize behaviour where the costs of certain activities are not incurred by those undertaking them.

    Spending power of a federal government arises when the federal government can influence lower level governments due to its financial rather than constitutional power.

    Predatory pricing is a practice that is aimed at driving out competition by artificially reducing the price of one product sold by a supplier.

    Refusal to deal: an illegal practice where a supplier refuses to sell to a purchaser.

    Exclusive sale: where a retailer is obliged (perhaps illegally) to purchase all wholesale products from a single supplier only.

    Tied sale: one where the purchaser must agree to purchase a bundle of goods from the one supplier.

    Resale price maintenance is an illegal practice wherein a producer requires sellers to maintain a specified price.

    Bid rigging is an illegal practice in which bidders (buyers) conspire to set prices in their own interest.

    Sharing economy: involves enterprises that are internet based, and that use production resources that have use outside of the marketplace.

    Two-part tariff: involves an access fee and a per unit of quantity fee.

    This page titled 14.6: Key Terms is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Douglas Curtis and Ian Irvine (Lyryx) via source content that was edited to the style and standards of the LibreTexts platform; a detailed edit history is available upon request.