Economics 0455 · IGCSE · Market failure

Market failure — practice question

A company that supplies water spent $\$470\text{ million}$ on building a pipe network to make water distribution more efficient. It hired local people and helped the local economy grow. It also improved facilities for the tourist industry. What cannot be concluded from this information?

  • AThe company increased its profits.
  • BThere was a decrease in regional unemployment.
  • CThere were fixed costs of $\$470\text{ million}$.
  • DThere were positive externalities.

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