On the Fourth of July, There Is No Fireworks Display

question 448

Multiple Choice

On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?

• A)The lack of a fireworks display in Yankeeville arises because of an externality.
• B)The lack of a fireworks display in Yankeeville is a case of market failure.
• C)In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately rational but socially inefficient.
• D)All of the above are correct.

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Definitions:

Lower Prices

A decrease in the cost at which goods or services are sold, enhancing affordability.

Better Products

Refers to goods that are of higher quality, more reliable, or offer greater value than competitors.

Market Power

The power of a firm to control the market price of its product. A monopoly has the greatest degree of market power.

Consumer Data

Information relating to individuals who purchase or show interest in products and services, including personal details, buying habits, and preferences.