Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. The “formal defence” of free markets is that, if all markets
were perfectly competitive, then prices would equal
for all products and the economy would be
.
b. The “informal defence” of free markets is based on the
following three central arguments:c. A situation in which the free market, in the absence of
government intervention, fails to achieve allocative
efficiency is called.
d. There are four major market failures that, in principle,
justify government intervention in markets. They are:2. Fill in the blanks to make the following statements correct.
a. The marginal cost faced by the private decision maker is
known as. The marginal cost faced by the private
decision maker plus any other costs imposed on third