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

Manny's Bar-n-Grill is next door to a franchised fast-food restaurant near a busy freeway exit. Essentially, the menus, food quality, atmosphere, and service are equal at the two restaurants. Nevertheless, the nationally franchised restaurant can attract more customers, even though its prices are higher. This situation

A good is considered to be a public good if it

There is substantial agreement among scholars that at least two functions of government are legitimate. These two functions are the

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

"Government failure" is present when

The government sometimes provides public goods because

A good for which it is impossible or at least very costly to exclude nonpaying customers from receiving the good and for which many individuals can share in the consumption of the same unit of the good is called a

Which of the following most clearly indicates why the franchiser of a product has a strong incentive to monitor the quality of the product among all of the franchised sellers?

Which of the following about public goods is true?

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

When there is reason to think that the existing structure of incentives will cause individuals in the market to act in ways that are inconsistent with ideal economic efficiency, economists say that

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

Suppose that the producers of copper are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of copper products in a competitive market compare with their values under conditions of ideal economic efficiency?

Many external costs occur because

When production of a good provides external benefits, there will be

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

In economics, a free rider is the term used for a person who

Is your economics textbook a public or private good? If you conclude that it is a private good, why do we have copyright laws?

Why is a stable monetary system essential for the smooth operation of a market system? What would an unstable monetary system be like? Why isn't a barter economy just as efficient as an economy with money?

From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to