Unit 2.12 - The Market's Inability to Achieve Equity [HL only]
What you need to know and understand:
Key concepts:
Concepts to understand:
- Workings of free market economy may result in an unequal distribution of income and wealth
Key concepts:
- Scarcity
- Choice
- Efficiency
- Equity
- Economic well-being
- Sustainability
- Change
- Interdependence
- Intervention
Concepts to understand:
- The market mechanism may result in socially undesirable outcomes that do not achieve efficiency, environmental sustainability and/or equity.
- Market failure, resulting in allocative inefficiency and welfare loss.
- Resource overuse, resulting in challenges to environmental sustainability.
- Inequity, resulting in inequalities.
- Governments have policy tools which can affect market outcomes, and government intervention is effective, to varying degrees, in different real-world markets.