Market Failure and Allocative Efficiency Quiz
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Questions and Answers

What is the situation called when the marginal private benefits (MPB) are equal to the marginal private costs (MPC) for an individual consumer or firm?

  • Private efficiency (correct)
  • Pareto optimality
  • Social efficiency
  • Market failure

    • When is social efficiency achieved?

  • When MPB equals MSC
  • When MSB equals MSC (correct)
  • When MSB equals MPC
  • When MPB equals MPC

    • What do economists describe as an improvement in social efficiency without making anyone worse off?

  • Market failure
  • Pareto improvement (correct)
  • Information asymmetry
  • Monopoly powers

    • What is the failure of the market to allocate resources efficiently known as?

    <p>Market failure</p> Signup and view all the answers

    What leads to welfare loss for society according to the text?

    <p>Resource misallocation</p> Signup and view all the answers

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