Exam 14: Government Intervention in the Market

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

Figure 14-1 -Refer to Figure 14-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 8000 pounds of pecans are sold,

If a state requires all drivers to buy insurance,the problem of adverse selection is eliminated.

Adverse selection is a situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.

Which of the following parties is likely to have the most information about the health of an individual who is trying to purchase a health insurance policy?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Figure 14-1 -Refer to Figure 14-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 4000 pounds of pecans are sold,

Ordinarily,governments attempt to promote competition in markets.Why do governments use patents to block entry into some markets when this prohibits competition?

In the principal-agent relationship,the agent is

A tragedy of the commons occurs when a resource is

One reason patent protection is vitally important to pharmaceutical firms is

The cost of group health insurance is lower than if an individual buys a policy on his own because

What is moral hazard?

Which of the following can a firm use to defend a successful product's brand name?

Private producers have no incentive to provide public goods because

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems,the insurance company is trying to reduce

Figure 14-2 Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 14-2 shows their willingness to pay for different quantities of street lights,the market demand for street lights and the marginal cost of installing the street lights. -Refer to Figure 14-2.How much is Amit willing to pay to have 4 street lights installed?

For certain public projects such as building a dam on a river or a bridge to an island,what procedure is a government likely to use to determine what quantity of a public good should be supplied?

In the highly competitive fast-food restaurant market,brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

What is moral hazard?