Fill in the Blanks Market FailuresOnline version Externality by Nilam Chandra 1 Market rider smoking Free Externality failure Negative Positive is the economic situation defined by an inefficient distribution of goods and services in the free market . 2 Non excludable Non rivalrous Public good Market failures Free rider Externalities occur when one person's actions affect another person's well - being , and the relevant costs and benefits are not reflected in market prices . 3 goods failure negative market externality free public rider positive A arises when my neighbors benefit from my cleaning up my yard . 4 externality rider failure excludable positive free non negative market A arises when one person's actions harm another . 5 education training externality market smoking failure An example of negative externality is . 6 failure smoking pollution traffic congestion noise education An example of positive externality is . 7 Middlemore externality hospital positive negative market failure childcare Private is an example of a public good . 8 Free rider Non rivalrous Externality Public goods Market failure Nonexcludable means that it is costly or impossible for one user to exclude others from using a good . 9 rivalrous Non Free Negative rider externality positive excludable means that when one person uses the good , it does not prevent others from using it . 10 taxation good positive Private public free Market externality A and services are administered by the government and paid for collectively through taxation . 11 positive riders excludable negative rivalrous failures Free externalities market Non are a problem because while not paying for the good or service they may continue to access or consume it .
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