Government intervention in an effort to promote

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24) Government intervention in an effort to promote allocative efficiency in all industries would likely impose a cost in terms of economic growth. One explanation for this is that 24) A) much of the innovation and productivity growth that leads to economic growth comes from oligopolistic firms. B) firms in perfectly competitive industries that are already allocatively efficient would also be affected by the intervention and become inefficient. C) some policies to promote allocative efficiency will lead to decreased income inequality. D) correcting externalities inevitably reduces the economy's growth rate. E) some policies to promote allocative efficiency will lead to increased income inequality. Answer:A
Diff: 3 Topic: 16.3a. market failure Skill: Applied 25)One cause of allocative inefficiency is 25)
Diff: 1 Topic: 16.3b. externalities Skill: Recall 26) Government intervention in a particular industry is unnecessary if each of the industry's firms is operating where 26)
Diff: 2 Topic: 16.3b. externalities Skill: Applied 27)The problem with externalities is essentially one of 27)
Diff: 1 Topic: 16.3b. externalities Skill: Recall 7
28)A plausible example of market failure due to an externality is 28) A) the cost of building new highways outside of major cities. B) the high salaries enjoyed by professional athletes. C) the despoiling of rivers and lakes by nitrogen run - off from agricultural fertilizers. D) a farmer with an apple orchard who also keeps bees. E) the line - ups at the theatre when a good movie is playing. Answer:C
Diff: 2 Topic: 16.3b. externalities Skill: Applied

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