Which of the following could be evidence of a market failure?
A) Resources in an economy are not fully utilized.
B) The market price of a product is above the average cost of production.
C) There are only a handful of firms competing against each other in an industry.
D) Market prices do not reflect true production costs.
Answer: D
Economics
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A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its
A) fixed costs. B) variable costs. C) external costs. D) depreciation due to machinery becoming obsolete.
Economics
With full information any contract will lead to production efficiency
Indicate whether the statement is true or false
Economics