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In dealing with market failures, the government always bases its decisions on economic analysis of marginal cost and marginal benefit.

True / False.

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  1. 17 July, 23:18
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    Answer: The correct answer is : False

    Explanation: The Optimal Policy: - One in which the marginal cost of undertaking the policy equals the marginal benefit of that policy

    -If policy isn't optimal it means resources are being wasted because the savings from reducing expenditures on a program with be worth more than the gains that will be lost from reducing the program. To deal with informational problems that lead to market failures, society could regulate the market and see that individuals provide the right information (ex: government licensing of individuals in the market, requiring those with licenses to reveal full information about the good being sold).
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