Exam 4: Market Failures Caused by Externalities Asymmetric Information

The Coase theorem suggests that the government does not have to be involved at all in resolving a market failure due to externalities.

If the unit price of a product is P, then the amount of money buyers would need to pay for a given quantity Q is equal to

In a market where negative externalities are associated with consumption and production, the equilibrium will not be efficient because

Which of the following antipollution policies is least likely to make use of cost-benefit analysis?

At the output level defining allocative efficiency,

The "too big to fail" policy of the Fed, whereby some banks are bailed out if they are in danger of failing because they are too big and could bring the system down, leads to which of the following problems?

Market failures

Refer to the provided graph. Suppose consumers do not know the safety risks associated with a particular good and that the free-market equilibrium is at E, as shown in the diagram above. If an independent agency now provides accurate information to consumers about the harmful characteristics of the product, then

Darcy and Rachel live down the hall from each other in the same dorm. Darcy likes to play her music loudly down the hall, and Rachel finds the music annoying. A Coase theorem solution for this problem would be for