6. Consider a good with a production process with fixed costs and constant marginal costs. Which of the following statements are correct? a) If marginal costs are zero the good is non-excludable. b) If marginal costs are zero the good is non-rival. c) A Pareto-efficient market equilibrium implies that the production process cannot cover its costs. d) A Pareto-efficient market equilibrium requires a price of zero.

6. Consider a good with a production process with fixed costs and constant marginal costs. Which of the following statements are correct? a) If marginal costs are zero the good is non-excludable. b) If marginal costs are zero the good is non-rival. c) A Pareto-efficient market equilibrium implies that the production process cannot cover its costs. d) A Pareto-efficient market equilibrium requires a price of zero.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter8: Understanding Markets And Industry Changes

Section: Chapter Questions

Problem 5MC

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2) Name two types of market failure. Explain why each may cause market outcomes to be inefficient.
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