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9. Market efficiency and market failure Suppose that the following graph shows a free market equilibrium,...

9. Market efficiency and market failure

Suppose that the following graph shows a free market equilibrium, with QE as the equilibrium quantity.

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For an output level above QE', the value of a unit to a buyer is _______ the cost of a unit to a seller.

Suppose a firm that produces for this market employs a private security force that makes town residents, many of whom have no business with the company, feel safer. This scenario is characterized by _______ , which is an example of _______ 


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Answer #2

-For an output level below QE, the value of a unit to a buyer is greater than the cost of a unit to a seller.

-externality , market failture 

source: 2/2
answered by: Sunflower
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