Suppose That in the Production of Peanut Butter, Peanuts 'R

question 39

Multiple Choice

Suppose that in the production of peanut butter, Peanuts 'R' Us discards broken peanut shells onto an adjacent recreational area.This will most likely lead to the market failure of:

• A) external cost.
• B) deregulation.
• C) imperfect information.
• D) special interest groups.

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Definitions:

Disposable Income

The liquidity pool available for households to channel into saving and spending after income tax deductions.

Induced Consumption

The part of consumer spending that increases when disposable income rises and decreases when disposable income falls.

Disposable Income

The amount of money left for spending and saving after income taxes have been deducted.

Autonomous Consumption

The level of consumption that does not change with fluctuation in income; it is the consumption level when income is zero.