Market failure occurs when
A. the stock market experiences a very large loss.
B. a good is too expensive for the market to provide.
C. one good is superior to another and drives it out of the market.
D. an unrestrained market economy leads to too few or too many resources going to a specific economic activity.
Answer: D
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If the Fed promises to conduct a(n) ________ for several years, inflation expectation will be ________
A) contractionary fiscal policy; high B) expansionary monetary policy; high C) contractionary monetary policy; high D) expansionary fiscal policy; low
Diminishing marginal product of labor occurs when adding another unit of labor
A) increases output by an amount larger than the output added by the previous unit of labor. B) decreases output by an amount smaller than the output added by the previous unit of labor. C) changes output by an amount smaller than the output added by the previous unit of labor. D) decreases output.
Predicting business cycles is difficult because
A) they are very persistent. B) the weather changes unpredictably. C) statistics lie. D) their frequency is irregular.
A market
A) always involves the personal exchange of goods for money. B) allows interactions between consumers and firms. C) always takes place at a physical location. D) has no influence on prices.