Question

Attempts 8. Property rights and market failures Bakers are much likely to supply pastries to the market if property rights are enforced. In the presence of market failures, public policy can improve economic efficiency. Classify the source of market failure in each case listed. A person smoking in a restaurant emits second-hand smoke that harms other restaurant patrons. There is only one car dealership in a small town, giving the dealership the abilty to infiuence the price of cars Copyright NoticesTerms of Use Privacy Notice Security Notice Pro

Answer 1

Bakers are much more likely to supply pastries to the market if property rights are enforced.

A person smoking in a restaurant emits second hand smoke that harms other restaurant patrons. Externality because the consumption of cigarettes by one person negatively affects the other people .

There is only one car dealership in a small town , giving the dealership the ability to influence the price of cars. Market power because if there is only one car dealer , then this has the monopoly power, sets the price in the market.