What is market failure? How can the government correct market failure?
What will be an ideal response?
Market failure is a situation in which the market economy leads to too few or too many resources going to a specific economic activity as a result of externalities. External costs lead to too much supply in a market than otherwise. In this case, the government can correct the market outcome by imposing a tax and regulation. On the contrary, external benefits lead to too little market demand than otherwise. In this case, the government can correct the market outcome with subsidies and regulation.
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Real interest rates have, at times, been negative. Why would anyone lending money agree to a negative real interest rate?
What will be an ideal response?
According to the text, "economics tempers the enthusiasm of a manager to focus on the customer" because
A) customers hardly know what they want. B) focusing solely on the customer may ignore other important elements of business success. C) it shows the manager that the greatest benefit to the firm is to sell more. D) it enables the manager to see that any kind of customer focus is not worth the costs. E) it ensures that managers will find equilibrium.
The mortgage crisis started to come to a head
A) when the Federal Reserve started to raise interest rates. B) when government deficit started to grow at increasing rates. C) when the Federal Reserve passed a law aimed at getting every American to own their own home. D) a. and b. are true
There is a surplus of quantity supplied over quantity demanded when
A. market price is above equilibrium price. B. market price equals equilibrium price. C. market price is below equilibrium price.