How Do the Concepts of Market Failure and Failure of Market

question 30

Multiple Choice

How do the concepts of market failure and failure of market outcome relate to the concept of Pareto optimality?

• A) Market failure is judged by the criteria of Pareto optimality; failure of market outcome rejects Pareto optimality as the sole criterion.
• B) Failure of market outcome is judged by the criteria of Pareto optimality; market failure rejects Pareto optimality as the sole criterion.
• C) Both market failure and failure of market outcome are judged by the criteria of Pareto optimality.
• D) Both market failure and failure of market outcome reject the criteria of Pareto optimality for another criterion.

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Definitions:

Instrument Overdue

Refers to a financial instrument, like a check or promissory note, that has not been paid or honored by its due date.

Personal Defenses

Legal defenses used in contract law that relate to the specific circumstances or relationships between the parties involved, affecting the enforceability of the contract.

Holder in Due Course

A legal term referring to a party that has acquired a negotiable instrument in good faith and for value, thereby having certain rights to enforce the instrument free of many defenses.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, and which can be transferred to another holder.