Market Failure: Definition & Causes

Instructions:

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question 1 of 3

A rise in minimum wage has all of the following consequences EXCEPT which one?

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1. The city officials of Anytown, USA, allows a company to re-purpose a plot of land currently used as a public park. The company plans on building a multiplex movie theater with a large parking garage, which will lead to what type of market failure?

2. How does the government intervene in the supply and demand of demerit goods?

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About This Quiz & Worksheet

There are a number of causes for market failure when it comes to economic activity. Quiz your understanding of this subject by answering questions on key points like consequences of a rise in the minimum wage and the market fail related to the re-purposing of land that gets rid of a public park.

Quiz & Worksheet Goals

These topics will be covered on the quiz:

  • One way the government gets involved in supply and demand related to demerit goods
  • Result of a monopoly in the marketplace
  • Lighthouse or a street lamp as a type of good

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about market failure and how it occurs
  • Interpreting information - verify that you can read information about demerit goods and how the government intervenes in their supply and demand process
  • Making connections - use your understanding of a rise in the minimum wage and its consequences
  • Information recall - access the knowledge you've gained regarding a public park that is re-purposed to a company that removes it and what type of market failure that is considered

Additional Learning

Market failure can affect the public in myriad ways. Learn more with the accompanying lesson called Market Failure: Definition & Causes, which will teach you about these key points:

  • Externality and how it's associated with market failure
  • Non-excludability, non-rival consumption and non-rejectability
  • Merit goods and demerit goods
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