A Market Failure Is Most Likely to Occur When

question 58

Multiple Choice

A market failure is most likely to occur when:

• A) a sole producer of a good faces no threat of competition.
• B) several producers of a good compete for customers by having price wars.
• C) several producers of a good search for the lowest-cost method of production.
• D) many producers produce identical products, and only the consumers and producers are affected by the transactions.

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Definitions:

Benefits

The advantages or positive outcomes gained from a particular situation, action, or policy.

Kitty Genovese

A case that became a symbol of urban apathy, surrounding the murder of a woman in New York in 1964, famously cited in discussions of the bystander effect.

Diffusion of Responsibility

The process wherein a bystander does not take action (e.g., in an emergency situation) because there are other bystanders who share the responsibility for intervening.

Experiment

A research method used to investigate cause-and-effect relations between one variable (the independent variable) and another (the dependent variable). In an experiment, the investigator manipulates the independent variable, randomly assigns participants to various levels of that variable, and measures the dependent variable.