Question

question 16 of 19 > click on the graph below to make it interactive and answer the following questions. a. which of the following types of market failure can lead to the type of deadweight loss depicted in the interactive graph? (select all that apply.) negative (bad) externalities taxes and quotas market power positive (good) externalities b. what does this type of deadweight loss triangle reflect? excess marginal costs and too many transactions a lack of advantageous transactions implemented and marginal benefits acquired too many transactions executed and marginal benefits acquired excess marginal costs and a lack of advantageous transactions

Explanation:

a. Negative externalities occur when the production or consumption of a good or service imposes costs on a third - party not involved in the transaction, leading to over - production and deadweight loss. Taxes and quotas can distort the market equilibrium and cause deadweight loss. Market power (such as in monopolies) allows firms to restrict output and charge higher prices, resulting in deadweight loss. Positive externalities generally lead to under - production, not the type of deadweight loss shown in the graph.
b. The deadweight loss triangle reflects a situation where there are excess marginal costs (because production is not at the efficient level) and a lack of advantageous transactions that could have occurred at the efficient quantity.

Answer:

a. negative (bad) externalities, taxes and quotas, market power
b. excess marginal costs and a lack of advantageous transactions