The Term "Market Failure

question 18

Multiple Choice

The term "market failure"

• A)means the same thing as "market power."
• B)refers to the dissolution of a market when firms decide to quit producing a certain product.
• C)refers to the failure of a market to produce an efficient allocation of resources.
• D)refers to government's failure to enforce the property rights of households or firms that participate in a certain market.

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Definitions:

Demand Function

A mathematical function showing the quantity of a good demanded at different prices.

Price Elasticity

Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Yen

The official currency of Japan, known internationally by its symbol ¥.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium is not achievable or not achieved in a market.