ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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do nothing to improve the situation.
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potentially remedy the problem and increase economic efficiency.
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always remedy the problem and increase economic efficiency.
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in theory, remedy the problem, but in practice, public policy has proven to be ineffective.
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Detailed explanation-1: -True. When markets fail, public policy can potentially remedy the problem and increase economic efficiency. True. Welfare economics is the study of the well-being.
Detailed explanation-2: -Market failure can be caused by a lack of information, market control, public goods, and externalities. Market failures can be corrected through government intervention, such as new laws or taxes, tariffs, subsidies, and trade restrictions.
Detailed explanation-3: -Market failure refers to the inefficient distribution of goods and services in the free market. In a typical free market, the prices of goods and services are determined by the forces of supply and demand, and any change in one of the forces results in a price change and a corresponding change in the other force.
Detailed explanation-4: -How Can Market Failure Be Corrected? The primary means by which market failure can be corrected is through government intervention. This requires the government to pass legislation such as antitrust policies and to incorporate various price mechanisms such as taxes and subsidies.