When Producers Do Not Produce the Efficient Amount of a Product

question 173

Multiple Choice

When producers do not produce the efficient amount of a product because they are unable to charge consumers what they need to do so, then there exists a

• A) demand-side market failure.
• B) supply-side market failure.
• C) competitive market.
• D) monopolistic market.

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Definitions:

Competitive Markets

Markets characterized by many buyers and sellers where no single participant can significantly influence the price of goods or services.

Externalities

Effects of a transaction or activity on third parties who are not directly involved, which can be either beneficial (positive externalities) or harmful (negative externalities).

Property Rights

Legal rights defining the ownership and use of resources including land, intellectual property, and personal assets.

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.