Micro Quiz 2

Demand-side market failures occur when

demand curves don't reflect consumers' full willingness to pay for a good or service

People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a

demand-side market failure

A market

is an institution that brings together buyers and sellers

Market failure is said to occur whenever

private markets do not allocate resources in the most economically desirable way

Market failures

result in overproduction or underproduction of a good

Graphically, the market demand curve is

the horizontal sum of individual demand curves

Which of the following is an example of market failure?

all of these

Markets, viewed from the perspective of the supply and demand model

assume many buyers and many sellers of a standardized product

The demand curve shows the relationship between

price and quantity demanded

The law of demand states that, other things equal

price and quantity demanded are inversely related