Author Question: Governments can eliminate market failure due to an imperfectly competitive market by A) changing ... (Read 80 times)

mynx · **on:** Jul 1, 2018

Governments can eliminate market failure due to an imperfectly competitive market by

A) changing the market structure, for example by eliminating monopoly protection.
B) having the government own the monopoly.
C) imposing regulations that reduce prices.
D) All of the above.

Question 2

The demand for salt is relatively price inelastic, while the demand for pretzels is relatively price elastic. How can you best explain why?

What will be an ideal response?

xoxo123 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

D

Answer to Question 2

Salt has few substitutes, and takes up a small percentage of the consumer's budget, and thus demand is likely to be inelastic. While pretzels are also a small part of the budget, there are many substitutes available.