The production possibilities curve shows the tradeoff between housing and all other goods.
(a) If the current mix of output is at point A and the optimal mix of output is at point C, does a market failure exist?
(b) If the government has a laissez faire approach, will it intervene?
(c) If the government intervenes and the economy moves to point D, is this a government failure?

Transcribed Image Text:

Production possibilities curve HOUSING (units per year) ALL OTHER GOODS (unito por year)