Which of the following is a source of market failure?
A. Private goods.
B. Government intervention.
C. Market power.
D. None of the choices are correct.
Answer: C
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When your textbook says that it is misleading to say that the market economy produces an aggregate GDP-measured "economic pie," the authors have the following claim in mind:
A) Unlike a pie, income in the economy can't be divvied out independent of the exchange process. B) The economy produces more than just pies. C) The "pie" metaphor focuses solely on real GDP and excludes the more important measure of nominal GDP. D) The production of pies create no income opportunities for market participants.
When faced with an economic loss, a competitive firm will exit the industry in the long run
a. True b. False Indicate whether the statement is true or false