Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 12, Problem 3.1P

(a)

To determine

Validate the statement on sources of market failure.

(b)

To determine

Validate the statement on sources of market failure.

(c)

To determine

Validate the statement on sources of market failure.

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Consider the market for cigarettes. Suppose that the tobacco industry (i.e. the big tobacco companies) conducts research on the health benefits of smoking, and to their surprise they find that smoking actually causes cancer. a. Using a generic model of supply and demand, illustrate and discuss how the market for cigarettes would likely be affected if this information became widely available. b. Would the tobacco industry want to conceal or reveal that information? Explain your answer.
When manufacturers and marketing executives decide to limit what products are available in various markets because they have opinions about what they want people to buy, this is an example of [] A. Knobe effect ii B. Availability bias iic. Attribution bias [] D. None of the above
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