Principles of Microeconomics (12th Edition)
12th Edition
ISBN: 9780134081199
Author: CASE
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 3.1P
(a)
To determine
Validate the statement on sources of market failure.
(b)
To determine
Validate the statement on sources of market failure.
(c)
To determine
Validate the statement on sources of market failure.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Several years ago, hurricane Gilbert destroyed thousands of acres of banana in Jamaica. Farmers whose crops were destroyed by the hurricane were much worse off, but farmers whose crops were not destroyed benefited from the hurricane. Why did this occur? What information would you need about the market for bananas in order to assess whether farmers as a group were hurt or helped by the floods?Explain that in detail using graphs .
Economists have stated that an economy has plunged to a market failure with an uptick in natural gas prices and production which has led to underperformance in other areas of the economy.
1. Identify the type of market failure being discussed in the article and discuss why
market failure occurs in this scenario.
2. Suggest a relevant government policy that would yield an efficient outcome and
carefully explain the process through which the implementation of the
government policy will lead to the optimal outcome.
3. How will the imposition of the chosen government policy impact consumer?
surplus, producer surplus and total surplus in this scenario?
Give three definitions of market efficiency used by economists. How does efficiency fit into the definition of market failure given by economists? Which market structure represents a failing market the least likely?
Chapter 12 Solutions
Principles of Microeconomics (12th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market? a. To promote efficiency b. To protect an industry from foreign competition c. To enforce property rights d. To promote equalityarrow_forwardexplain whether there has been a market failure, what type of failure, and what measures might solve it, You should consider: the advantages and disadvantages of any solution whether doing nothing might be the best solution the concept of efficiency. A health insurance provider finds that the health of its customers is much worse than the average health of the population anything else you think important.arrow_forwardThrough economic reasoning, explain the interrelationship with markets and government.arrow_forward
- The chart above shows the market for polio vaccine in Pakistan. This vaccine provides external benefits because vaccinating one person reduces the likelihood of other people catching the disease. a.) If there is a competitive market and there is no government intervention, what will be the amount of vaccine? b. ) If a foundation takes over the cost of the vaccine, what will be the amount of vaccine used in the market? How will the market efficiency change? Why?arrow_forwardRegarding the problem/article below, as a professional in economics, do you think it is necessary for the government to intervene in this problem and why?arrow_forwardThrough economic reasoning, explain the interrelationship with markets and government, while keeping the following statements in mind: Markets are useful, efficient and flexible institutions through which society can allocate its resources. Markets often produce unwanted results, such as pollution, lack of health care and poverty. Government can play a useful role to remedy the problem of unwanted results created by markets. Thank you so much for answering my question :) I appreciate the time and effort! I hope you have a good rest of the day/night!arrow_forward
- The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called “closing the Washington Monument.” When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Is this strategy economically efficient? In other words, does it minimize the utility loss from a budget cut? Explain. If this strategy is not economically efficient, what is the incentive to pursue such a strategy?arrow_forwardAdam Smith’s theory of the invisible hand is often used to justify a hands-off approach to market activity. Can you give an example where government intervention in a market led to an inefficient outcome? How about an example where government intervention improved the outcome?arrow_forward1. One of the key underpinnings of public choice analysis is the assumption that politicians and bureaucrats - make political decisions based primarily on benefiting future generations. - act not out of self‑interest but desire to increase the general utility of the public. - seek only to maximize long term economic growth through increasing GDP. - make political decisions based on self‑interest, just as individuals and firms do.arrow_forward
- Match each scenario with the panel that best describes what will happen to the market when the scenario occurs. Explain your answer in a manner that someone who hasn’t taken economics before can understand and be sure to identify exactly what the market is that you’re describing. The FDA creates stricter safety standards that drugs must meet before being brought to market. A well-known movie athlete serves as a Nike brand shoe spokesperson. Earthquakes destroy key manufacturing buildings. The USDA ordered the recall of steaks contaminated with E. coli. Unusually good weather affects corn production in Iowa. A new ban on cigarettes is instituted preventing them from being smoked in public areas. New technology reduces the amount of steel required to manufacture trucks. Smartphones are made using technology that increases battery life between charges.arrow_forward1,Think back to August 6, 1945. The United States has just dropped an atomic weapon on thecity of Hiroshima killing tens of thousands of Japanese and devastating the infrastructure. AKeynesian at that time might conclude that there is a silver lining in the destruction, aseconomic prosperity will result. Evaluate the logic of this claim in a few sentences. 2,Most introductory economics textbooks have a section on “market failure.” It is here thatstudents learn that markets may fail to achieve their potential – leaving people worse off thanthey theoretically could be. The existent of market failure is often taken as an excuse forgovernment intervention to do whatever markets fail to do. In just a couple of sentences, explainwhy economists (and others, particularly politicians) must accept the possibility of “governmentfailure” as well? That is, tell me why government solutions to perceived market “failures” maythemselves fail to achieve their own stated goals? The U.S. Drug war is an…arrow_forward- As the opportunity cost of a good decreases, people buy Select one: a. more of that good and also more of its complements. b. less of that good but more of its complements. c. more of that good but less of its complements. d. less of that good and also less of its complements. - In broad terms what is the difference between microeconomics and macroeconomics? Select one: a. They use different sets of tools and ideas. b. Macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not. c. Microeconomics studies the effects of government taxes on the national unemployment rate. d. Microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. - What will happen when there is a fall in price? Select one: a. Leads to a higher level of production b. Will cause an outward shift of supply c. Leads to a movement along a demand…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning