This lesson covers Topic 6.3 in the AP Syllabus. Today we will study market failures related to two coordination problems (public goods provision and the tragedy of the commons).
Learning Target
Analyze the ways in which incentives influence what is produced and distributed in a market system.
Evaluate the extent to which competition among sellers and among buyers exists in specific markets.
Describe the consequences of competition in specific markets.
Criteria for Success
I will be able to use ideas related to market equilibrium and elasticities to analyze economic problems.
I will be able to demonstrate this understanding using a graph of the aforementioned model.
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Assignments
Read: Krugman (Module 76)
Watch: The video lecture for today's topic (linked above).
Optional: The videos linked below.
Formative Assessment (MCQ's): You will take a formal assessment during class. The assessment will consist of multiple-choice questions and one FRQ from an old AP Exam. Doing the problem of the day and ensuring that you understand it will help you prepare for today's formative assessment and help to ensure that you understand the concepts in this lesson.
Problem of the Day
Both public goods and common resources involve externalities
Are the externalities associated with public goods generally positive or negative? Use examples in your answer. Is the quantity of public goods supplied by the free market greater than or less than the socially efficient quantity?
Are the externalities associated with common resrources generally positive or negative? Use examples in your answer. Is the use of common resources in a free market socially efficient?