Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 5, Problem 13CQ
To determine
Define market failure.
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Under what conditions might government intervention in an economy improve a
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Explain what is meant by market failure and outline the sources of market failure.
Is market failure either necessary or sufficient for government intervention?
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- How can government prevent market failure?arrow_forwardAdam Smith’s theory of the invisible hand is often used to justify a hands-off approach to market activity. Can you give an example where government intervention in a market led to an inefficient outcome? How about an example where government intervention improved the outcome?arrow_forwardExplain the two causes of market failures. Given their definitions, could a market be affected by both types of market failures simultaneously?arrow_forward
- In a market system, provide an example for when government can enhance or harm any of the processes involved in terms of what should be produced, how it should be produced, and for whom.arrow_forwardIn general, what are some of the tactics the government uses to correct market failure? List 3 and provide a brief explanation of the opportunity costs involved in correcting these failures.arrow_forwardCan the market / price mechanism find some solutions?arrow_forward
- What are market failure situations and what is role of government in that situationsarrow_forwardIdentify a type of market failure. Provide an example of that type of market failure and briefly explain one way that the government could help reduce the negative effect of that market failure.arrow_forwardIs “fairness” the economic basis for government laws and regulations designed to remedy market failures? If so, why; if not, what is the economic basis?arrow_forward
- Market failure means that?arrow_forwardAccording to Christopher Stone in "Why the Market Can't Do It", the market: Group of answer choices cannot allocate resources adequately to meet all social needs is a remedy for all the problems a society may face with its commercial actors can restrain giant modern corporations can allocate resources adequately to meet all social needsarrow_forwardA well educated society can be considered which of the following, as it pertains to economics? Negative Externality Positive Externality Economic Relief Social Welfarearrow_forward
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