Use the Following to Answer Question(s): Correcting for Market Failure

question 17

Multiple Choice

Use the following to answer question(s) : Correcting for Market Failure: A Public Good

-(Exhibit: Correcting for Market Failure: A Public Good) A private market produces R units of output of a public good.The efficient price would be _______ and the efficient output would be _______ , which suggests the implementation of a government _______.

• A) lower; greater; tax
• B) P₁; W; subsidy
• C) higher; greater; subsidy
• D) P₂; Q; subsidy

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Definitions:

Market Value

The total value of a company or asset in the financial market based on the current price at which it can be bought or sold.

Idle

The state of an asset or resource not being in use, contributing no output or value during a certain period.

Fixed Assets

Long-term tangible assets that are used in the operation of a business and are not expected to be converted to cash in the short term, such as land, buildings, and machinery.

Book Value

Book Value represents the value of a company or an asset as it appears on the balance sheet, calculated by subtracting liabilities from assets.