When There Are Too Few or Too Many Resources Going

question 86

Multiple Choice

When there are too few or too many resources going to an economic activity,

• A) a public good exists.
• B) a market failure exists.
• C) a regressive tax is in place.
• D) a free-rider problem exists.

---

Definitions:

Risk-Free Rate

The theoretical return on investment with zero risk of financial loss, often represented by the yield on government bonds.

Call Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.

Option Premium

The price paid by the buyer to the seller to acquire the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price within a specified period.

Call Option Contracts

Financial agreements that give the buyer the right, but not the obligation, to buy an asset at a specified price within a certain timeframe.