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Questions and Answers
Which of the following is a type of market imperfection?
Which of the following is a type of market imperfection?
- Perfect competition
- Free market
- Market equilibrium
- Monopoly (correct)
How can regulations limit negative effects of market imperfection?
How can regulations limit negative effects of market imperfection?
- By reducing quality control
- By implementing price, entry, and quality control (correct)
- By limiting entry
- By increasing prices
What are the consequences of imperfect markets?
What are the consequences of imperfect markets?
- Lower prices and limited choices
- Lower prices and increased choices
- Higher prices and limited choices (correct)
- Higher prices and increased choices
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Study Notes
- Market imperfection lacks perfect competition and has barriers to entry.
- Companies in this market can have market power to set higher prices and gain higher profits.
- Externalities can affect consumers or producers indirectly.
- Types of market imperfection include monopoly, oligopoly, concurrence monopolistique, and duopoly.
- Market imperfection leads to higher prices, limited choices, and negative externalities.
- Regulations can limit negative effects of market imperfection through price, entry, and quality control.
- Regulations can be costly for companies and the state.
- Regulations can be difficult to implement and enforce.
- Regulations can reduce incentives for innovation and investment.
- Imperfect markets have consequences for both consumers and producers.
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