Market failure occurs when:
A. markets have perfect information.
B. markets do not produce the most efficient outcome.
C. companies merge to increase efficiency.
D. companies are too efficient.
Answer: B
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Suppose the price of capital and labor remain constant. As a firm's expenditures for capital and labor increase, its isocost line
A) rotates outward on the Y-intercept. B) shifts in parallel to the original isocost line. C) rotates outward on the X-intercept. D) shifts out parallel to the original isocost line.
According to the Laffer curve, increases in the tax rate will lead to a(n)
A) steady decrease in tax revenues. B) steady increase in tax revenues. C) initial decrease in tax revenues and then an increase in tax revenues. D) initial increase in tax revenues and then a decrease in tax revenues.
Assuming price elasticity of demand is reported as an absolute value, an inelastic demand has a measured elasticity:
A. greater than zero. B. greater than one. C. less than one. D. exactly one.
Those hurt by inflation include:
a. labor unions with COLA clauses. b. borrowers. c. savers. d. owners of real estate. e. owners of precious metals, antiques, and works of art.