An example of an activity that can be affected by both types of market failures would be a

Marketing Dec 28, 2020

An example of an activity that can be affected by both types of market failures would be

a. public roads that have pot holes.

b. a fireworks display that caused some fire damage.

c. cigarette smoking that hurt non-smokers.

d. public library that conducted reading classes.

Expert Solution

Market failure refers to the situations in economics, which may be defined by the distribution of the goods and services inefficiently in the free market. The market failure takes place when the individuals focus on acting in a rational manner for their interest aims at producing a less economical inefficient output. Market failures may include monopoly, externalities, etc. Thus, a fireworks display that caused fire damages refers to an example which is affected by both types of failures. (Correct answer: b)

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote