AP Microeconomics / Unit 6: Market Failure and the Role of Government
6.1 Socially Efficient and Inefficient Market Outcomes
Notes
Efficient when marginal social benefit = marginal social cost. Market failures (externalities, public goods, market power, information problems) cause deadweight loss.
Practice
The socially efficient quantity is where:
Includes everyone's costs and benefits.
Deadweight loss represents:
Efficiency loss.
Which is a market failure?
An externality.
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