Answer:
1. More.
2. Externality.
3. Market power.
Explanation:
1. Loggers are much more likely to supply wood to the market if property rights are enforced. In the presence of market failures, public policy can improve economic efficiency.
2. Externality: A house party plays music at a very high volume, disturbing other residents in the neighborhood.
3. Market power: A single public utilities company is responsible for supplying electricity for an entire state. As a result, the utilities company can set the price of electricity.
Property rights refer to the exclusive authority of individuals to own and control their own scarce resources legally. It is very important that property rights are enforced and protected by law enforcement agencies such as courts and police, so that the free market can function effectively.
For instance, with the enforcement of property rights, loggers are much more likely to supply wood to the market.
Hence, for an efficient and effective level of output of goods and services in a market, property rights should be enforced.
Also, a market failure is an economic situation characterized by an inefficient distribution or allocation of goods and services in the free market, mostly resulting in net social welfare loss in a particular country. The two (2) main sources of market failures are both market power and externality.
Market power is the relative ability of economic agents to manipulate or influence the market price of goods and services by influencing the level of demand, supply or sometimes both.
Externality basically causes the market to produce a large amount or little amount of goods and service, thereby causing an inefficient distribution or allocation of resources.
