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The big push theory argues that coordination failures may arise because of:

A) Pecuniary externalities.
B) Technological externalities.
C) Lack of human capital.
D) None of the mentioned answers is correct.

1 Answer

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Final answer:

The Big Push theory indicates coordination failures due to pecuniary externalities, which occur when market prices affect others' economic situations, aligning with market failure concepts.

Step-by-step explanation:

The Big Push theory argues that coordination failures may arise because of multiple factors, including the inability of resources to shift markets and the occurrence of externalities, which can be either positive or negative. These externalities, specifically pecuniary externalities, are mentioned in the options provided by the student's question. Pecuniary externalities refer to the effects that the actions of an economic agent have on another agent through market prices. Other factors leading to business failure can include poor management, unproductive workers, intense competition, and demand-supply shifts. In the context of market failure, the inability of markets to produce public goods and the presence of externalities is recognized, which align with the theme of market failure as discussed in the Big Push theory.

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