When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ?
Correct answer: D. that property rights have not been well established
- A. government regulation
- B. that prices are not low enough so firms over produce
- C. that prices are not high enough, so people overconsume
- D. that property rights have not been well established
Explanation
Efficient markets require clearly defined and enforceable property rights so owners have incentives to use resources efficiently. Weak property rights commonly cause externalities and open-access overuse.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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