Which of the Following Is the Best Example of Market

question 107

Multiple Choice

Which of the following is the best example of market failure?

• A) Lucian wants more video games but doesn't buy them because his willingness to pay is less than the equilibrium price in the market.
• B) Kara's Kitten Shop won't sell more purebred cats because the equilibrium price in the market is less than it would cost her to provide more.
• C) Alex and others in a community want a new outdoor soccer field and are willing to pay to use it,but no private business is willing to build it.
• D) Government fixes the price of gasoline,resulting in a shortage.

---

Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Fundamental Attribution Error

The tendency to overemphasize personal characteristics and ignore situational factors in judging others' behaviors.

Self-Serving Bias

The common tendency to attribute one’s successes to personal characteristics and failures to external factors.