Exam 4: Market Failures Caused by Externalities Asymmetric Information

Suppose that a large tree on Betty's property is blocking Chuck's view of the lake below. Betty accepts Chuck's offer to pay Betty $100 for the right to cut down the tree. This situation describes

Consumer surplus

Refer to the provided table. The producer surplus is $4 for producer

Upon buying a car with airbags, Indy begins to drive recklessly. This is an example of the

When the marginal benefit of an output exceeds the marginal cost,

Refer to the competitive market diagram for product Z. Assume that the current market demand and supply curves for Z are D₂ and S₂. If there are substantial external costs associated with the production of Z, then

eBay and Amazon provide "sellers' ratings" information based on the experiences of past buyers. This is to help resolve the adverse selection problem faced by potential buyers.

Which of the following would be an example of a moral hazard problem?

Which of the following does not illustrate the asymmetric information problem?

External benefits in consumption refer to benefits accruing to

Where there is asymmetric information between buyers and sellers,

Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle

Assume that there are four consumers A, B, C, and D, and the prices that each of them is willing to pay for a glass of lemonade is, respectively, $2.50, $2.25, $2.00, and $1.75. If the actual price of lemonade is $1.50 per glass, then consumer surplus in this market will be

When the total consumer and producer surplus is at a maximum, the deadweight loss in the market is zero.

Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is

Refer to the diagram. From society's perspective, if MB₁ and MC₂ are relevant,

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment.If the government intervenes and corrects the externality in the situation described above, we would expect

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment.Refer to the above information. Which of the following policies would be most appropriate for dealing with this problem?

If a good that generates positive externalities was produced and priced to take into account these spillover benefits, then its