Question

1. Corner offices in high-rise office buildings usually cost more to rent than other offices. This BEST illustrates the economic concept of:
Opportunity Costs.
Specialization.
Scarcity.
Equilibrium.
2. Market failure occurs when the pursuit of self-interest leads to bad results for society.
True
False

Answer 1

1. Scarcity.
Explanation: The rental cost for corner offices are more relative to other offices because the corner office is relatively short in supply as compared to their demand i.e. corner offices are scarce. The more scarce a good relative to its demand is the higher is its price.

2. True

Explanation: In market failure, when the overall social benefit is compromised for personal gain by individual parties.