Bakers are much likely to supply pastries to the market if property rights are enforced. In the presence of market failures, public policy can improve economic efficiency.
Classify the source of market failure in each case listed.
Market Failure Market Power Externality
A person smoking in a restaurant emits second-hand smoke that harms other restaurant patrons.
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.

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.