Government Failure Occurs When

question 100

Multiple Choice

Government failure occurs when:

• A) government fails to implement policy designed to correct a market failure.
• B) government intervention in the market to improve a market failure succeeds.
• C) government intervention in the market to correct a market failure makes things worse.
• D) there is no need for government intervention into the market because there is no market failure.

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Definitions:

Consumer Surplus

The variance between consumers' potential payment for a good or service and their actual expenditure.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating sensitivity to price changes.

Price Elasticity

Understanding the relationship between price movements and the corresponding changes in demand for a good.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various price levels.