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Homework answers / question archive / 10
10. Which of the following is a 2 points case of market failure in the context of the provision of pure public goods? * Consumers pay higher prices for a good following a shortage of supply. A government decides to supplement the private sector provision of a good. A government finds it necessary to O provide a range of goods not offered by the private sector. A government's financial support for O an industry leads to over-supply and a loss of efficiency.
2 points 12. The benefit of an increase in a government subsidy to milk producers will go mainly to consumers in the form of a lower price when: * Demand for milk is price elastic. Supply of milk is perfectly inelastic. O Demand for milk is price inelastic. O Demand for milk is income elastic.
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