A free market fails when

A) firms that produce goods which create positive externalities go bankrupt.
B) firms that produce goods which create negative externalities earn high profits.
C) there is an external effect in either production, consumption, or both.
D) there is government intervention.


C

Economics

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The trade feedback effect illustrates the fact that

A. an increase in U.S. economic activity leads to a decrease in the economic activity of other countries. B. imports affect exports and exports affect imports. C. U.S. imports depress the imports of other countries. D. imports and exports are unrelated to one another.

Economics

Refer to the figure below. If Row Resorts offers reduced rates, then Column Cruises would receive the highest payoff if it:

A. kept its rates high. B. offered reduced its rates. C. chose either strategy because it will have the same payoff in either case. D. entered into a cartel with Row Resorts and agreed to jointly reduce rates.

Economics

The level of saving in Japan has historically been high relative to the level of domestic investment. Based on this information, we would expect that

A) Japan's net exports have been relatively high. B) Japan's capital inflows are positive. C) Japan's private saving is greater than its public saving. D) Japan's net foreign investment has been relatively low.

Economics

When two countries choose to use a new currency, they are

A) participating in a monetary union. B) dollarizing. C) forming an optimal currency area. D) increasing their monetary autonomy.

Economics