Which of the Following Is the Best Example of a Market

question 93

Multiple Choice

Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

• A)The market price of the resource rises.
• B)Weak property rights create fears that firms will not be allowed to extract in the future.
• C)Market interest rates increase.
• D)New information suggests that the demand for the resource will be greater in the future.

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Definitions:

Operant Behavior

A method of learning that employs rewards and punishments for behavior, emphasizing the effects of external stimuli on behavior.

Respondent Behavior

Behavior that occurs as an automatic response to a certain stimulus.

Explorative Behavior

Actions taken to gather information about one's environment or to learn new things through direct experience.

Response Rate

The frequency at which a specific behavior is performed, often measured in experimental or observational studies to determine the effect of variables.