Government Provides a Nonexcludable Public Good That No One Wants

question 59

Multiple Choice

Government provides a nonexcludable public good that no one wants.This situation is most closely related with:

• A) government solving a market failure.
• B) government failure.
• C) market failure.
• D) the market solving a government failure.

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Definitions:

Deadweight Loss

Deadweight loss refers to the inefficiency caused in the market when the allocation of resources is not optimal, often resulting from tariffs, taxes, or other restrictions.

Price Floor

A price floor is a government-imposed minimum price charged for a product, aimed at preventing prices from dropping too low.

Binding Price Floors

Government-imposed price minimums that are set above the equilibrium price, causing surpluses in the market.

Binding Price Ceilings

Government-imposed price limits that are set below the market equilibrium price, leading to shortages.