When Goods Are Subject to Market Failure,one Possible Solution Is

question 87

Multiple Choice

When goods are subject to market failure,one possible solution is to:

• A)change social norms.
• B)have government either regulate the market or provide the good.
• C)privatize the good.
• D)All of these are possible solutions.

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Definitions:

Economies of Scale

Economic concept describing the cost advantage that arises with increased output of a product, where the average cost per unit decreases as production scales up.

Production

The process or activity of creating goods and services through the combination of labor, capital, and natural resources.

Economies of Scale Monopoly

A market scenario where a single firm can produce goods at a lower cost per unit due to its large scale of production as compared to smaller competitors.

Natural Monopoly

A market condition where due to high fixed costs or unique product, a single supplier is most efficient in serving the entire market demand.