An analysis of market failure and government failure indicates
What will be an ideal response?
both the market and the government may fail to meet conditions of economic efficiency; in each individual case, the choice of market or public-sector action requires careful evaluation.
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What is an efficiency wage and what effect does it have in the labor market?
What will be an ideal response?
An economy's total labor income is $2 trillion, and total capital income is $1 trillion. In the Cobb-Douglas production function, the exponent on capital is ________
A) two-thirds B) one-half C) one-third D) 0.3 E) none of the above
Regarding the price elasticities of demand, which of the following statements is true?
a. Price elasticities vary considerably from product to product b. Luxurious goods are generally less price elastic. c. Necessities are generally more price elastic. d. All of these statements are true.
Which of the following is an argument in favor of a balanced budget rule?
a. Some economists believe that rules are better than discretion. b. Per-capita debt is small relative to lifetime income. c. The effect of deficit spending on future generations depends in part on what the government buys. d. Other government policies also redistribute income across generations.