Which of These Is an Example of the FAILURE of the Market

question 3

Multiple Choice

Which of these is an example of the FAILURE of the market to achieve economic efficiency?

• A) Firms and employees successfully achieving all mutually beneficial transactions.
• B) Alpha Industries is willing to pay $55,000 per year to hire a computer programmer. Dean, a qualified computer programmer, would gladly give up his job as a waiter for a computer programming job paying at least $45,000, but is unaware of Alpha's opening.
• C) Laura refuses to quit smoking even though Marlene offers her $1 per hour to stop.
• D) Ace Engineering is willing to pay Diane $11 per hour, but Diane is willing to work for $10 per hour, so Ace hires her for only $10 per hour.

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Definitions:

Labor Supply Data

Information and statistics about the workforce available for employment in an economy, including numbers, demographics, and skills.

Nominal Wages

Are the wages paid to workers measured in current monetary terms, without adjustment for inflation.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used to measure inflation.

Real Wages

Refers to wages that have been adjusted for inflation, indicating the actual buying power of the compensation.