Market failure occurs when
A. resources are misallocated, or allocated inefficiently.
B. firms that are incurring losses leave a market.
C. firms are only able to earn a normal profit.
D. perfectly competitive firms produce where MR = MC.
Answer: A
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Mortgage loans made to borrowers with a more limited ability to repay are known as
A. subprime mortgages. B. credit default swaps. C. leveraged securities. D. mortgage-backed securities.
The fact that U.S. currency is legal tender means:
A. it cannot be backed by gold or other metals. B. U.S. currency is good anywhere in the world. C. private businesses in the U.S. and the U.S. government must accept currency for payment. D. the only money the government will accept for settlement of debts is U.S. currency.
The measure of what households receive after personal income tax is deducted is
A. National income. B. Personal income. C. Disposable income. D. Gross domestic product.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.