If output of a good or service is zero in a market system,then we know that
A)the market system has failed.
B)the government must be preventing the production and sale of the good.
C)the good is a demerit good.
D)the lowest cost of producing the good is greater than the highest price consumers are willing and able to pay.

Question

Quizplus · Accepted Answer

In a market system, the production of a good or service is determined by the interaction of supply and demand. If the output of a good or service is zero, it means that the market demand for that good or service is too low to justify the cost of production. This could be because the lowest cost of producing the good is greater than the highest price consumers are willing and able to pay, leading to a lack of profitability and thus, no production of the good. This does not necessarily mean that the market system has failed or that the government is preventing the production and sale of the good. Additionally, the good being a demerit good is not necessarily relevant in this scenario.

If Output of a Good or Service Is Zero in a Market