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

Use the figure below to answer the following question(s). Figure 5-3 -Figure 5-3 illustrates the market for a product that generates an external benefit. D₁ is the private market demand curve, while D₂ is the demand curve including the external benefit. Which of the following is true?

Which of the following about public goods is true?

The government sometimes provides public goods because

When the free-rider problem exists,

Which of the following is the most fundamental function of government?

Which of the following is true of public goods?

Which of the following would be a protective function of government?

When a good is nonexcludable,

The maintenance of a framework of security and order through the establishment and enforcement of rules under which people can interact peacefully with one another and be secure in their person and property is known as the

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce

"Government failure" is present when

Brand names such as "Coca Cola" or "Nike"

The mortgage default rate is

When market failure is present,

The leverage ratio of an investment firm refers to

Sellers have a strong incentive to lobby government for legal restrictions that would reduce the intensity of competition in their market because

Because the benefits derived from an activity decline as it is expanded, it is generally

Which of the following is a source of information that helps consumers acquire information about the quality of a good or service?

Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused

The idea that an action should be undertaken if and only if the benefits exceed the costs is known as the concept of