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Solutions for Chapter 9: Market Failure and Government Failure

Full solutions for Explorations in Economics | 1st Edition

ISBN: 9780716701071

Solutions for Chapter 9: Market Failure and Government Failure

Chapter 9: Market Failure and Government Failure includes 10 full step-by-step solutions. This textbook survival guide was created for the textbook: Explorations in Economics, edition: 1. Since 10 problems in chapter 9: Market Failure and Government Failure have been answered, more than 2620 students have viewed full step-by-step solutions from this chapter. This expansive textbook survival guide covers the following chapters and their solutions. Explorations in Economics was written by and is associated to the ISBN: 9780716701071.

Key Business Terms and definitions covered in this textbook
  • average total cost

    total cost divided by the quantity of output

  • benefits principle

    the idea that people should pay taxes based on the benefits they receive from government services

  • Coase theorem

    the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own

  • commodity money

    money that takes the form of a commodity with intrinsic value

  • Condorcet paradox

    the failure of majority rule to produce transitive preferences for society

  • depreciation

    a decrease in the value of a currency as measured by the amount of foreign currency it can buy

  • discrimination

    the offering of different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics

  • exports

    goods produced domestically and sold abroad

  • imports

    goods produced abroad and sold domestically

  • indexation

    the automatic correction by law or contract of a dollar amount for the effects of inflation

  • internalizing the externality

    altering incentives so that people take account of the external effects of their actions

  • law of supply and demand

    the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

  • marginal tax rate

    the amount that taxes increase from an additional dollar of income

  • perfect complements

    two goods with right-angle indifference curves

  • producer surplus

    the amount a seller is paid for a good minus the seller’s cost of providing it

  • scarcity

    the limited nature of society’s resources

  • shoe-leather cost

    the resources wasted when inflation encourages people to reduce their money holdings

  • total revenue (for a firm)

    the amount a firm receives for the sale of its output

  • union

    a worker association that bargains with employers over wages, benefits, and working conditions

  • welfare economics

    the study of how the allocation of resources affects economic well-being