When Markets Fail,public Policy

question 129

Multiple Choice

When markets fail,public policy

• A)can do nothing to improve the situation.
• B)can potentially remedy the problem and increase economic efficiency.
• C)can always remedy the problem and increase economic efficiency.
• D)can, in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

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Definitions:

Elastic

Describes a situation where the quantity demanded or supplied of a good is sensitive to changes in its price.

Current Margin

The existing difference between a company's sales and its variable costs, indicating the portion of sales revenue that covers fixed costs and profits.

Desired Margin

The target profit margin a company aims for in pricing its products or services.

Production Level

the quantity of goods and services produced by a business or economy within a certain period.