Question
Multiple choice:
Conditions for economic efficiency Consider an economy that produces food and clothing. In this economy, there are 100 hours of labor available and 80 hours of capital available. For the production of food, the marginal rate of technical substitution of labor for capital is . for the production of clothing, the marginal rate of technical substitution of labor for capital is . where Kp is the amount of capital used for the production of food, Lp is the amount of labor used for the production of food, and KQ and LQ are the amounts of capital and labor used for the production of clothing, respectively. The current allocation of inputs uses 60 hours of labor and 30 hours of capital for the production of food and 40 hours of labor and 50 hours of capital for the production of clothing. This allocation economically efficient allocation of inputs. is is not Incomplete information and market failure a. One source of market failure is incomplete information. When there is incomplete information, the market system will not function efficiently. Why does incomplete information cause market failure? Some consumers might not buy a good even though the purchase would benefit them. Incomplete information causes market failure for all these reasons. Some consumers might buy a good even though it makes them worse off. Lack of information might induce producers to supply too much or too little of a good.
Explanation / Answer
3. is
10. incomplete information cause market failure for all these reasons
