What is a market failure?
A) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.
B) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost.
C) It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event.
D) It refers to a breakdown in a market economy because of widespread corruption in government.
Answer: A
You might also like to view...
Use the following graph for a monopolistically competitive firm to answer the next question.
Point b indicates
A. the price-output combination that yields maximum profits. B. the lowest possible cost of the firm's product. C. a situation where the firm is earning economic profits. D. a point that cannot be the long-run equilibrium point.
The major cost of production in the economy is
a. interest expense. b. capital costs. c. rents. d. profits. e. wages.
The U.S. imposes substantial taxes on cigarettes but not on loose tobacco. When the tax on cigarettes went into effect, the demand for home cigarette rolling machines most likely:
A. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise. B. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall. C. decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall. D. decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.
The most important statistical tool in empirical economics is standard deviation.
Answer the following statement true (T) or false (F)