Attempts

8. Property rights and market failures

Loggers are much

In the presence of

Keep the Highest/2

likely to supply wood to the market if property rights are not enforced.

more

less

failures, public policy can improve economic efficiency.

Classify the source of market failure in each case listed.

Market Failure

A house party plays music at a very high volume, disturbing other residents in the neighborhood.

There is only one car dealership in a small town, giving the dealership the ability to influence the price of cars.

Market Power

Externality