Mr. Whitebeard, the mayor of New Monopoly, sees market failure left and right. H

Question

Mr. Whitebeard, the mayor of New Monopoly, sees market failure left and right. He has recently received four market reports (listed below). Which one is not an example of a market failure and consequently gives him hope? Boardwalk and Park Place are the only two streets that have hotels and are both owned by the same O person. The owner charges very high prices to all who need an overnight stay in the city, who have no option but to pay, unless they want to sleep on the street. Oriental Avenue starts selling authentic Chinese seafood. As a result, the primary fish in the region becomes endangered. O The local electricity provider chooses to use the turbine of the local water supplier to generate power. This move has led to a reduction in pollution and cheaper maintenance costs. Mr. Whitebeard has had enough of market failure and chooses to replace his market economy with a command economy. Which decision would NOT move him towards a command economy? Marvin Gardens is forced to spend money on building hotels for tourism, resulting in increased profits Mr. Whitebeard will let the invisible hand guide the economy towards a command economy. Pacific Co. is forced to make more boats for the commercial fishing industry to supply fish to Oriental O Avenue O Vermont Ave, a farmer's market, is forced to only sell cheese, instead of its variety of agricultural goods.

Explanation / Answer

1) The correct option is C, because this will result in reaching an efficient solution without creating an external costs.

2) The correct option is B, because under the command economy the government takes all the decision and in the other options except the second the entities are lead by some other entity to produce and are thus commanded by others.

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