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

A car sells at different prices at different dealerships in a local market. If a consumer has imperfect information about the price of a car at each dealership, he should

If consumption of education creates an external benefit, then in order to increase efficiency relative to the outcome determined by private decisions,

Economic efficiency requires that

The key explanation for the prevalence of waterway pollution is

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

A good is considered nonrival-in-consumption if

When a good is nonexcludable,

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 provides an example of an externality?

Which of the following provides the best example of a public good?

Suppose external costs are present in a market which results in the actual market price of $70 and market output of 150 units. How does this outcome compare to the efficient, ideal equilibrium?

A college has found that during every home football game, a group of students sits on a hillside next to the stadium and watches the game without purchasing tickets. In economics, the problem that this college is facing is referred to as a

Because of the free-rider problem,

Figure 5-4 Refer to Figure 5-4. The efficient price and quantity are

When production of a good generates external costs, the

Which of the following is true of public goods?

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

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

Relative to a competitive situation, if a market lacks competition, economic theory suggests that

Is education a public good? Focus on whether it meets the two criteria for being a public good.