ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a private benefit and a private cost
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an external benefit and an external cost
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a private benefit and an external cost
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an external benefit and a private cost
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Detailed explanation-1: -Consumer goods are those goods, which satisfy the want of consumer directly. They are goods, which are used for consumption. For example bread, fruits, milk, clothes etc. Producer goods are those goods, which satisfy the want of consumers indirectly.
Detailed explanation-2: -Following are the various reasons for law of demand are: Law of Diminishing Marginal Utility: Law of diminishing marginal utility states that as we consume more and more units of a commodity, the utility derived from each successive unit goes on decreasing. So, demand for a commodity depends on its utility.
Detailed explanation-3: -The production possibility curve (ppc) shows the maximum possible combinations of outputs when an economy operates at full employment. The loss of confidence will prevent money being acceptable and its functions will not operate effectively. This will restrict specialisation and output.
Detailed explanation-4: -According to economic theory, consumption of goods and services is assumed to provide utility (satisfaction) to the consumer or end-user, although businesses also consume goods and services in the course of producing other goods and services (see: Distribution: Channels and intermediaries).