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When producers do not have to pay the full cost of producing a product, they tend to

A) underproduce the product because of a demand-side market failure.

B) overproduce the product because of a supply-side market failure.

C) overproduce the product because of a demand-side market failure.

D) underproduce the product because of a supply-side market failure.

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Insha Fatima
Insha FatimaLv10
30 Sep 2020

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Related questions

1. If the price of a product decreases, we would expect:

a. Demand to increase

b. Quantity supplied to decrease

c. Supply to decrease

d. Quantity supplied to increase

 

2. "Price" in the statement of the Law of Supply refers to:

a. The amount that buyers are willing and able to pay for each unit of the product.

b. Marginal cost of producing the last unit of the product.

c. The total revenues that sellers receive for selling a given quantity of the product.

d. The total amount that buyers pay to acquire a given quantity of the product.

 

3.  A decrease in demand and an increase in supply will:

a. Affect price in an indeterminate way and decrease the equilibrium quantity

b. Increase the price and affect the equilibrium quantity in an indeterminate way

c. Decrease price and affect the equilibrium quantity in an indeterminate way

d. Increase the price and increase the equilibrium quantity

 

4. When producers (say, of roads) are not able to make all consumers pay for enjoying their product (i.e., the roads), they tend to see:

a. The marginal cost of production is too low, and there is a supply-side market failure

b. The marginal benefit of production is too high, and there is a demand-side market failure

c. The marginal cost of production is too high, and there is a supply-side market failure

d. The marginal benefit of production that is too low, and there is a demand-side market failure

 

Demand-side market failures occur when:
 
(i) demand curves do not reflect consumer’s full willingness to pay for goods or services.
(ii) supply curves do not reflect the full cost of producing a good or services.
(iii) the government imposes a tax on a good or service.
(iv) a good or service is not produced because no one demands it.

Supply-side market failures occur when:

A) The government regulates the production of a good or service.

B) the demand and supply curves don't reflect consumers' full willingness to pay for a good or service.

C) a good or service is not supplied because no one wants it.

D) the demand and supply curves don't reflect the full cost of producing a good or service.

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