Question

QUESTION 49 Which of the four multiple-choice answers would an economist say provides the best justification for 0 when the market mechanism fails to achieve the optimal mix of output. Because the government will encourage the production of private goods Because the government can increase the level f market power of private businesses. government intervention into an e conomy? When the private sector is larger than public sector. QUESTION 50 Which of the four multiple-choice answers would an economist say best describes the free rider dilemma? Arises from the ability to exclude an individual from the benefits of someone else's purchase. is a government failure resulting from consumption of private goods. Reflects the inability to exclude an individual from the benefits of someone else's purchase. Means that the market mechanism is the most efficient way to produce public goods.

Answer 1

Answer to question 49 is first option. government intervention is not required when the market is itself maximizing the total surplus and generating the optimal output mix. However there are conditions under which this is not possible by the market itself and regulation is required

Answer to question 50 is option 3. There is a free riding problem in in economics when an economic agent attempts to free ride, that is, consume without paying for it. This can also be seen as an attempt not to follow any economic activity assuming that others are doing it and it will never be recognised.