It Is Generally Difficult or Impossible for Private Markets to Take

question 120

Multiple Choice

It is generally difficult or impossible for private markets to take externalities into account because:

• A)decision makers in the market fail to take account of the spillover effects of their behaviour
• B)buyers and sellers in private markets are only interested in social wellbeing
• C)people are only interested in short-term gains
• D)governments are responsible for externality problems

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Definitions:

Oligopoly

Defines a market structure characterized by a small number of firms dominating the market, leading to limited competition.

Brand Loyalty

Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category.

Demand Curve

Represents a graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices, usually downward sloping.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a ratio.