Which of the following is not an example of a failure of market outcome?
A. A person with a gun offers you your life for your money.
B. Emission of pollutants is producing acid rain and killing wildlife.
C. Addicts continue to use heroin even though they would be better off without it.
D. Income is not distributed in a way society wants.
Answer: B
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In the market for automobile insurance, moral hazard implies that
A) those who are insured might take greater risks. B) those who are uninsured might take greater risks. C) insured and uninsured alike will take greater risks. D) drivers with greater risks are more likely to buy insurance.
Distinguish between a voluntary export restraint and a quota
What will be an ideal response?
Credit risk management tools include
A) deductibles. B) collateral. C) interest rate swaps. D) duration analysis.
A movie producer has to decide to fund a new movie project. For this project, a success would earn $20 million and a failure would cost $60 million in lost profits. At what probability of expected success should he fund the movie?
a. 0.20 b. 0.25 c. 0.50 d. 0.75