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.

---

Definitions:

Mercantilists

Economic theorists and practitioners who advocated for mercantilism, a system promoting government regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers.

Service

Activities performed to satisfy the needs or desires of others, which can range from manual labor to intellectual or artistic output.

State

A politically organized community living under a single system of government; may also refer to the governmental apparatus through which policies are enforced and administered.

Habsburg Empire

A major European political entity that existed from the late Middle Ages until 1918, ruled by the Habsburg dynasty, including territories in modern-day Austria, Hungary, and other regions.