Market Failure Occurs When

question 81

Multiple Choice

Market failure occurs when

• A)stock markets crash because of the heavy selling of equities.
• B)an economy fails to allocate resources efficiently on its own
• C)consumer demand shows signs of slowing down​
• D)an economy cannot produce a good or service at a lower opportunity cost than others.
• E)there is a scarcity or surplus of goods in a market.

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Definitions:

Merchandising Firms

Companies that purchase goods at wholesale prices and resell them at retail prices, making a profit on the spread.

Manufacturing Firms

Companies that produce finished goods from raw materials through the use of labor, machinery, and equipment.

Merchandising Firms

Companies that purchase inventory in a finished form for the purpose of reselling it to consumers without further processing.

Manufacturing Firms

Companies engaged in the transformation of raw materials into finished products through the use of labor, tools, machinery, and chemical processing.