Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

Question

Quizplus · Accepted Answer

Weak property rights create uncertainty about future access to the resource, which can lead a firm to extract resources faster than the optimal rate to ensure that they can secure as much of the resource as possible before facing restrictions on extraction. This can lead to a depletion of the resource and damage to the environment, resulting in a market failure. The other options do not necessarily lead to a market failure that would cause a firm to extract resources at an unsustainable rate.

Which of the Following Is the Best Example of a Market