Which of the following is the best example of a supply-side market failure?
A) No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them.
B) Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist.
C) Government imposes taxes on the production of a socially desirable good.
D) A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
Ans: D) A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
You might also like to view...
Which of the following is an impact of the restriction on immigration on the domestic firms?
a. The domestic firms would produce more and reap greater profits. b. The domestic firms would hire more unskilled laborers at lower wages. c. The domestic firms would charge low prices for their products. d. The domestic firms would have to pay higher wages and make less profit. e. The domestic firms would make above normal profits in the long run.
Refer to the above diagram. Assume that G and T1 are the relevant curves, the economy is currently at B, and the full-employment GDP is A. This economy has a(n):
A. cyclically adjusted budget deficit. B. actual budget surplus. C. cyclically adjusted budget surplus. D. actual budget deficit.