Market Failure Occurs When

question 120

Multiple Choice

Market failure occurs when:

• A)prices of essential goods such as gas become very high.
• B)individual actions have side effects that are not properly taken into account.
• C)mutually beneficial trades take place.
• D)a business declares bankruptcy.

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Definitions:

Consumption

The action of using up a resource or goods in the process of fulfilling human needs or wants.

Income

Earnings received by an individual or entity, usually in the form of wages, salaries, or investments.

Interest Rate

The percentage of a loan charged to the borrower as interest, usually shown as an annual rate of the outstanding loan amount.

Utility Function

A mathematical representation in economics of a consumer's preference ordering over a set of goods and services.