If Market Signals Result in Pollution Beyond the Optimal Level,then

question 111

Multiple Choice

If market signals result in pollution beyond the optimal level,then

• A)The economy experiences government failure.
• B)A laissez faire approach will reduce the level of pollution.
• C)The market mechanism has failed to achieve efficiency.
• D)The government is allocating resources inefficiently.

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Definitions:

Average Product

The output per unit of input, such as the quantity of goods produced per worker, used to measure productivity.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, whilst holding other inputs constant.

Total Product

The total output of goods or services produced by a firm during a given period of time.

Diminishing Marginal Returns

A principle stating that as more of a production input is added, holding all others constant, the resulting additional output will eventually decrease.