In the Case of Market Failure

question 12

Multiple Choice

In the case of market failure:

• A) Socialism is called for
• B) Free markets provide superior outcomes
• C) Government intervention provides superior outcomes
• D) Firm owners will lose money

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Definitions:

Incentive

An external stimulus that motivates behavior (for example, money or fame).

Drive-Reduction Theory

A theory suggesting human behavior is motivated by the desire to reduce internal drives of needs, such as hunger.

Getting Some Food

The act of obtaining food to satisfy hunger, which can encompass a range of behaviors from purchasing food at a store to preparing a meal.

Sleeping

The natural state of rest for the mind and body, characterized by altered consciousness and reduced sensory activity.