Q9. Microeconomics

9. Market efficiency and market failure The following graph shows equilibrium in a free market, with equilibrium quantity of Q3. \\ / E ----------+ E l I I I I I I Demand I I OE QUANTITY For any level of output equal to Q3, a buyer values a unit of goods in this market 7 the unit will cost a seller. Suppose now that a rm that produces for this market hires a private security force, reducing crime not only in their factory, but also in the small town in which it is located. This is an example of Y due to Y