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

Which of the following is a true statement regarding why the government produces public goods?

As short-term interest rates began to rise in 2005, which one of the following mortgage loan categories experienced the largest increase in default and foreclosure rates?

Which of the following best explains why making air travel completely safe is not efficient?

The government sometimes provides public goods because

When consumers cannot tell the difference at the time of sale between high-quality products and those with defects, strong sales of the low-quality products will tend to depress price and drive the high-quality products from the market. Economists call this

An item purchased often by the same buyer is known as a

Consider two goods - one that generates external benefits and another that generates external costs. The actual market outcome would

How does an additional individual's consumption of a good that is nonrival-in-consumption, such as a radio broadcast, affect the amount of the good available to other consumers?

Anne has just purchased a new house in a lovely neighborhood. Her neighbors are friendly and even brought her house-warming gifts. Anne, however, has a problem. Her neighbors have cats, and Anne hates cats. Even though the city has a law requiring all outdoor pets to be on a leash, her neighbors ignore it, and the cats roam all over Anne's property. How would an economist describe this situation? Is there anything Anne can do?

Which of the following contributed to the soaring housing prices during 2002-2004?

When production of a good generates external costs, the

Government provision of goods and services that cannot easily be provided through markets because it is difficult to establish a one-to-one link between payment and consumption of the good is referred to as the

Which of the following correctly describes the external benefit resulting from an individual's purchase of a winter flu shot?

Sellers will tend to be most concerned with customer satisfaction when

Which of the following contributed to the rising mortgage default and foreclosure rates and the eventual economic crisis of 2008?

When a nuclear-powered electrical plant is permitted to dump radioactive waste at no cost into a recreational waterway lowering the value boaters receive from the waterway, the

The spillover effects of actions that affect the well-being of nonconsenting third parties are called

Government failure is present when

Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to

Students in a class are assigned to groups to work on a project. A grade will be given for each project, and everyone in the group will receive that grade. For the members of a particular group, the grade is a