Resource misallocation
What Resource misallocation means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Resource misallocation
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Reference: Pearson Edexcel
Arises in a free market when goods with positive externalities are under-provided and under-consumed, while goods with negative externalities are over-provided and over-consumed.
The outcome when the price mechanism fails, so that goods are priced too low and over-produced or over-consumed relative to the socially optimum level.
Topics that use Resource misallocation
- Market failure and externalities (Pearson Edexcel A-Level)
- Market failure in society (Pearson Edexcel A-Level)
Related terms
- Market failure
- Demerit goods
- External benefits
- External costs
- Externalities
- Information failure
- Information gaps
- Positive externalities
Using Resource misallocation in the exam
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