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

question 105

Multiple Choice

Use the following to answer question(s) : Correcting for Market Failure: Imperfect Competition

-(Exhibit: Correcting for Market Failure: Imperfect Competition) If the government intervenes to induce the imperfectly competitive firm shown in this exhibit to produce at the efficient level of output, the gain will be the _______ under the _______ curve between ________ .

• A) area; supply; R and W
• B) area; demand; R and W
• C) vertical distance; demand; V and W
• D) vertical distance; supply ; V and W

---

Definitions:

Equilibrium Price

The financial value where the availability of goods equals consumer demand.

Demand Falls

Demand falls occur when there is a decrease in the quantity of a good or service demanded at any given price, often due to changes in consumer preferences, income, or price increases.

Supply Stays

A term that is not typically used in economic contexts; thus, it might not be a real key-term. NO.

Price Ceiling

A legally established maximum price a seller can charge for a product or service to prevent market prices from rising too high.