Government Failure Occurs When

question 83

Multiple Choice

Government failure occurs when

• A) public policies do not bring about an optimal allocation of resources.
• B) taxes on polluting firms reduce output to the socially desired level.
• C) subsidies to schools increase enrollment to the socially optimal level.
• D) the private market fails to achieve the socially desired output level.

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Definitions:

Positive-Sum Game

A situation in economic transactions where all participants can benefit, or the sum of the gains and losses is positive.

Payoff Matrix

A table that displays the potential outcomes for each player in a game, given the choices of all players.

Gains and Losses

The difference between the amount earned and the amount spent in buying, operating, or producing something.

Duopoly

A market structure characterized by two producers or sellers dominating the market.