Government May Not Have an Incentive to Correct a Market

question 37

Multiple Choice

Government may not have an incentive to correct a market failure because:

• A) government doesn't have the information it needs to correct the market failure.
• B) government reflects politics, which reflects political pressure to benefit special interest groups.
• C) policy makers fear that intervention will lead to a Pareto optimal outcome.
• D) the benefit of correcting the market failure might exceed the cost of correcting the market failure.

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Definitions:

Deadweight Loss

A reduction in economic effectiveness that happens when a good or service doesn't reach or cannot reach equilibrium.

Price

The monetary value attached to a product or service, determined by the interaction of supply and demand.

Law Office Filing System

An organized method of storing and managing legal documents and case files within a law office.

Safeguard Legal Documents

Measures taken to protect important legal papers from damage, loss, or unauthorized access.