weak spots

• What is market failure?

  The market does not produce optimal output
• What are common causes of market failure?

  Externalities, public goods, information asymmetry
• What is an example of an externality?

  Pollution
• What is government failure?

  Government intervention worsens resource allocation
• What is deadweight loss?

  A loss of economic welfare from inefficiency
• What is rent-seeking?

  Obtaining benefits through lobbying or non-productive means
• What does crowding-out refer to?

  Reduction in private investment due to government borrowing
• What is regulatory capture?

  Regulators favor the industry over public interest
• What are the implications of market failure and government failure?

  • Market failure leads to inefficient resource allocation
  • Government failure can worsen market issues
  • Both can result in economic inefficiencies
• How do deadweight loss and rent-seeking affect the economy?

  • Deadweight loss reduces overall economic welfare
  • Rent-seeking diverts resources from productive uses
  • Both create inefficiencies in the market