Exam 5: Difficult Cases for the Market, and the Role of Government

If the construction of a new elementary school would create $5 million worth of benefits for citizens and cost $7 million to construct, then using the criterion of economic efficiency, the school

During the 1980s and 1990s, the Federal Reserve's monetary policy focused primarily on

What are the two distinguishing characteristics of a public good?

Many investment banks quickly collapsed when the housing market collapsed because

Markets fail to allocate resources efficiently when

The increase of sub-prime (including Alt-A) loans as a share of the total from 2001-2005 was an important contributing factor to the economic crisis of 2008 because

If the consumption of a good by one individual does not change the amount of the good available to others, the good is considered to be

"Government failure" exists when political decision-makers choose actions that

Sparkle-Bright toothpaste is a new product that advertises it will give you fresh breath and shiny, white teeth. You buy a tube for $1.99, and after brushing, you have both bad breath and dull teeth. Is there a role for the public sector in this situation?

Many external costs occur because

A good that is both nonexcludable and nonrival-in-consumption is called a

Suppose external benefits are present in a market which results in the actual market price of $14 and market output of 150 units. How does this outcome compare to the efficient, ideal equilibrium?

In a competitive market, if the production process involves an external cost, such as pollution of the environment, the market will

Which of the following contributed to the soaring housing prices during 2002-2005?

If education creates external benefits,

The "free rider problem" occurs in connection with

During 1979-2005, the mortgage default rate

Which of the following reforms would reduce the likelihood of a future financial crisis?

Because of the free-rider problem,

Markets fail when externalities are present