Market Failure with Common Resources Occurs Because

question 247

Multiple Choice

Market failure with common resources occurs because

• A)the government imposes a negative externality on everyone's consumption of the resource.
• B)common resources can become public goods through overuse.
• C)consumption can be privately profitable even when it is socially undesirable.
• D)All of the above are correct.

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Definitions:

Substitutes

Goods or services that can be used in place of each other.

Elastic

A term that describes the sensitivity of the demand for a good or service to a change in its price, with "elastic" demand being significantly responsive to price changes.

Least Elastic

Describes a situation where there is the smallest responsiveness of the quantity demanded or supplied to changes in price, typically associated with goods and services for which there are no close substitutes.

Price Sensitive

A term describing how the demand for a product changes in response to price changes; consumers are highly reactive to changes in price.