Question

Which type of market failure does the following represent?
(i) Construction of a bowling alley in the center of a busy town.
(ii) Charlie loves watching Sponge Bob on his local TV station but he never sends any money to support the station during its fund raising drives.
(iii) Buying a used appliance on Ebay
(iv) A mango tree in an open lot

Answer 1

Which type of market failure does the following represent?
(i) Construction of a bowling alley in the center of a busy town is a positive externality.
(ii) Charlie loves watching Sponge Bob on his local TV station but he never sends any money to support the station during its fund raising drives is a free-rider problem.
(iii) Buying a used appliance on Ebay is not a market failure.
(iv) A mango tree in an open lot is a positive externality.