Market Failure and the Role of Government

Surplus of the product.

Shortage of the product.

Equilibrium quantity remains unchanged.

Increase in demand for the product.

It maintains social efficiency by adjusting only the distribution of goods without affecting total output.

It decreases social efficiency by preventing supply from reaching its optimal level, resulting in deadweight loss.

It increases social efficiency by ensuring that only high-quality products reach the market.

It has no impact on social efficiency as long as demand stays constant regardless of production levels.

The market produces less than the socially optimal quantity leading to higher overall economic welfare.

The market produces more than the socially optimal quantity leading to lower overall economic welfare.

The presence of externalities has no significant impact on production decisions or overall economic welfare.

The market self-corrects producing at the socially optimal quantity without affecting overall economic welfare.

Through regulation that requires levels of consumption according to exact societal benefits without considering individual preferences or costs involved.

By applying taxes on consumption that exactly match the magnitude of positive externalities leading toward underconsumption.

By subsidizing consumption too much beyond correcting for positive externality, causing overconsumption relative to socially optimal quantity.

By providing public goods as an alternative solution which always leads towards efficiency due to non-excludability characteristics of such goods.

The good has a unitary elastic demand.

The good has an inelastic demand.

The good has an elastic demand.

The price elasticity of demand is not determinable from this information.

Consumer surplus is maximized.

Total surplus is maximized.

Both consumer and producer surplus are zero.

Producer surplus is maximized.

The equilibrium quantity would decrease.

The equilibrium quantity would remain unchanged.

The equilibrium quantity would increase.

There is not enough information to determine its effect on equilibrium quantity.

The Quantity produced will be less than socially desirable

Increase inefficiency as overproduction occurs when external benefits exceed private benefits

No impact on production or consumption as external benefits do not influence individual choices

Decrease inefficiency as underproduction occurs when external benefits exceed private benefits

Because there aren't enough resources to produce every good desired

Because producers prefer making one type of good only

Because consumers have identical preferences for goods

Because governments dictate all production decisions

Perfect competition among firms.

Equilibrium price and quantity.

Lack of government intervention.

Inelastic demand and supply.