All of the Following,except One,are Examples of Market Failures

question 32

Multiple Choice

All of the following,except one,are examples of market failures.Which is the exception?

• A)Competitive markets do not result in an equitable distribution of incomes and wealth.
• B)Competitive markets do not ensure that the economy will be stable.
• C)Competitive markets do not ensure that competition will continue.
• D)Competitive markets do not ensure that individuals get the type of jobs they would like.
• E)Competitive markets do not take externalities into consideration.

Grasp the economic principle of diminishing marginal utility.

Understand consumer surplus and its implications on consumer satisfaction.

Recognize the impact of different pricing on consumer surplus and utility.

Analyze the concept of consumer rationality in utility theory.

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Definitions:

Marginal Utility

The change in total utility a person receives from consuming an additional unit of a good or service.

Utility Function

A mathematical representation that ranks an individual's preferences over a set of goods and services, based on the level of satisfaction or utility derived.

Optimal Utility Rule

A principle in consumer theory stating that consumers allocate their income in a way that maximizes their total utility, given their budget constraint.

Indifference Curve

A graph representing combinations of goods or services among which a consumer is indifferent, showing the same level of utility for each point along the curve.