Economists Suggest That a Market Can Fail If

question 127

Multiple Choice

Economists suggest that a market can fail if

• A)production or consumption can harm an innocent third party.
• B)consumers have to pay more than they want to.
• C)producers get smaller profits than they desire.
• D)governments dictate prices.

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Definitions:

Equilibrium Wage

The salary point at which labor supply aligns perfectly with labor demand.

Marginal Product

The additional output that is produced by employing one more unit of a factor of production, holding other factors constant.

Equilibrium Wage

The wage rate that balances the quantity of labor supplied and the quantity of labor demanded.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products sold by all firms, and no barriers to entry or exit.