5. Property rights and market failures Loggers are much likely to supply wood to the market if property rights are not enforced. In the presence of market failures, public policy can improve economic efficiency. Classify the source of market failure in each case listed. Market Market Failure Power Externality A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream. A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: Public Goods And Common Resources
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5. Property rights and market failures
Loggers are much
likely to supply wood to the market if property rights are not enforced.
In the presence of market failures, public policy can improve economic efficiency.
Classify the source of market failure in each case listed.
Market
Market Failure
Power
Externality
A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town
downstream.
A single grocery store is the only source of food in a small town, giving the store the ability to influence the price
of food.
Transcribed Image Text:5. Property rights and market failures Loggers are much likely to supply wood to the market if property rights are not enforced. In the presence of market failures, public policy can improve economic efficiency. Classify the source of market failure in each case listed. Market Market Failure Power Externality A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream. A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food.
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