Use the Following to Answer Questions

question 127

Multiple Choice

Use the following to answer questions:
Figure: Market Failure
-(Figure: Market Failure) Look at the figure Market Failure. Suppose it represents the demand for and marginal cost per pound of shrimp in the bay. The additional cost of the shrimp due to the depletion of the common resource is equal to AC. Without government intervention, the market will produce _____ pounds of shrimp.

• A) 0
• B) E
• C) F
• D) G

---

Definitions:

Consumption Spending

Expenditures by individuals and households on goods and services for personal use.

Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to sell at a given price level in a specific period.

Government Purchases

Expenditures by the government on goods and services that directly increase the economy's productive capacity.

Autonomous Net Taxes

Taxes that are not influenced by the level of economic activity, such as fixed taxes.