a) If there are external benefits associated with theconsumption of a good or service the market demand
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Question:
a) If there are external benefits associated with theconsumption of a good or service
the market demand curve will overestimate the true demandcurve.
the market demand curve will underestimate the true demandcurve.
consumers are paying for all these benefits.
the market demand curve will be the vertical summation of theindividual demand curves.
b) Market failure is said to occur whenever
competitive markets do not allocate resources in the mosteconomically desirable way.
prices rise.
some consumers who want a good do not obtain it because theprice is higher than they are willing to pay.
government intervenes in the functioning of competitivemarkets.
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