Use the Following to Answer Question

question 190

Multiple Choice

Use the following to answer question:
Figure: Correcting for Market Failure
-(Figure: Correcting for Market Failure) Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.Economists argue that,in an unregulated private market,too _____ is produced.In the figure,the supply curve (S₁) reflects _____ marginal cost.

• A)little;private
• B)much;private
• C)much;social
• D)little;social and private

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Definitions:

Tax

A mandatory financial charge imposed by a governmental organization on individuals or entities to fund public expenditures.

Slightly Inelastic

A situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Demand for Product

The total amount of a product or service that consumers are willing and able to purchase at various price levels, at a given time.

Advertisers

companies or individuals who pay to promote their products or services, typically through various media channels.