Question 1

Market failures take place when

Accepted Answer

A) a market fails to have the goods that consumers want. 
B) an underground market develops. 
C) market transactions lead to underproduction or overproduction of a good. 
D) producers stop production. 
A) a market fails to have the goods that consumers want. 
B) an underground market develops. 
C) market transactions lead to underproduction or overproduction of a good. 
D) producers stop production.

Question 2

The distinguishing characteristic of a public good is

Accepted Answer

A) noncompetitive production. 
B) durability. 
C) exclusivity. 
D) nonrival consumption. 
A) noncompetitive production. 
B) durability. 
C) exclusivity. 
D) nonrival consumption.

Question 3

Under present U.S.law,cocaine is an example of

Accepted Answer

A) a government-sponsored good. 
B) a capital good. 
C) a public good. 
D) a government-inhibited good. 
A) a government-sponsored good. 
B) a capital good. 
C) a public good. 
D) a government-inhibited good.

Question 4

What are the key characteristics of a public good?

Accepted Answer

A public good is not subject to the prin

Question 5

A government action that can help correct positive externalities is

Accepted Answer

A) a tax on producers of the good that provides external benefits. 
B) a subsidy to consumers of the good that provides external benefits. 
C) an effluent fee charged to producers of the good that provides external benefits. 
D) regulations aimed at reduced production by sellers of the good that provides external benefits. 
A) a tax on producers of the good that provides external benefits. 
B) a subsidy to consumers of the good that provides external benefits. 
C) an effluent fee charged to producers of the good that provides external benefits. 
D) regulations aimed at reduced production by sellers of the good that provides external benefits.

Question 6

Which of the following might be a method that the government could use to correct a negative externality?

Accepted Answer

A) an effluent fee on waste from the production of goods that create negative externalities 
B) government subsidies to producers of goods that create negative externalities 
C) financing additional production of goods that create negative externalities 
D) encouraging overallocation of resources of production of goods that create negative externalities 
A) an effluent fee on waste from the production of goods that create negative externalities 
B) government subsidies to producers of goods that create negative externalities 
C) financing additional production of goods that create negative externalities 
D) encouraging overallocation of resources of production of goods that create negative externalities

Question 7

When an Australian citizen enjoys military protection in Australia without contributing to the cost of Australia's defense budget,then

Accepted Answer

A) this citizen is a free rider. 
B) Australia is a free rider. 
C) this citizen receives no benefits if Australia is attacked. 
D) Australia's defense budget will run out of funds. 
A) this citizen is a free rider. 
B) Australia is a free rider. 
C) this citizen receives no benefits if Australia is attacked. 
D) Australia's defense budget will run out of funds.

Question 8

All of the following are ways that the government can correct for positive externalities EXCEPT

Accepted Answer

A) by subsidizing the consumption of the good. 
B) producing the good itself. 
C) by regulation. 
D) by assessing an effluent fee. 
A) by subsidizing the consumption of the good. 
B) producing the good itself. 
C) by regulation. 
D) by assessing an effluent fee.

Question 9

Which of the following will LEAST likely generate positive external benefits to society?

Accepted Answer

A) Education 
B) The use of cell phone services 
C) Health care 
D) Requiring drivers to undergo periodic eye examinations 
A) Education 
B) The use of cell phone services 
C) Health care 
D) Requiring drivers to undergo periodic eye examinations

Question 10

Which of the following is FALSE about public-sector decision making?

Accepted Answer

A) Decisions are based on majority rule. 
B) The price charged to consumers is often less than its full opportunity cost. 
C) Decisions involve no opportunity cost. 
D) Incentives play a role in decision making. 
A) Decisions are based on majority rule. 
B) The price charged to consumers is often less than its full opportunity cost. 
C) Decisions involve no opportunity cost. 
D) Incentives play a role in decision making.

Question 11

A characteristic of a public good is that a public good is provided

Accepted Answer

A) to some businesses,but not to others. 
B) only in some states. 
C) to low income residents in some states. 
D) to many individuals at no additional cost. 
A) to some businesses,but not to others. 
B) only in some states. 
C) to low income residents in some states. 
D) to many individuals at no additional cost.

Question 12

The principal feature of private goods is that

Accepted Answer

A) they cannot be rented or purchased. 
B) consumption by one person reduces the quantity available to others. 
C) no one can be excluded from consumption of the product. 
D) externality problems associated with their production are always negative. 
A) they cannot be rented or purchased. 
B) consumption by one person reduces the quantity available to others. 
C) no one can be excluded from consumption of the product. 
D) externality problems associated with their production are always negative.

Question 13

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Accepted Answer

A) a public good. 
B) a merit good. 
C) an externality. 
D) the free-rider problem. 
A) a public good. 
B) a merit good. 
C) an externality. 
D) the free-rider problem.

Question 14

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

Accepted Answer

When the market fails to provide certain

Question 15

-In the above figure,market equilibrium at point E yields the quantity X.The quantity $X ^ { * }$ is socially optimal amount.The government can achieve the optimal outcome by

Accepted Answer

A) setting the price at $P _ { 1 }$ . 
B) establishing a tax of $\mathrm { P } _ { 3 }$ -
$P _ { 1 }$ per unit of the good sold. 
C) establishing a tax of $\mathrm { P } _ { 3 }$ -
$P _ { 2 }$ per unit of the good sold. 
D) setting the price at $\mathrm { P } _ { 4 }$ . 
A) setting the price at $P _ { 1 }$ . 
B) establishing a tax of $\mathrm { P } _ { 3 }$ -
$P _ { 1 }$ per unit of the good sold. 
C) establishing a tax of $\mathrm { P } _ { 3 }$ -
$P _ { 2 }$ per unit of the good sold. 
D) setting the price at $\mathrm { P } _ { 4 }$ .

Question 16

My brother decides to leave his empty soda can on someone's lawn.This is an example of a

Accepted Answer

A) public good. 
B) positive externality. 
C) neutral externality. 
D) negative externality. 
A) public good. 
B) positive externality. 
C) neutral externality. 
D) negative externality.

Question 17

Providing public goods is a(n)

Accepted Answer

A) economic function of government. 
B) political function of government. 
C) economic and political function of government. 
D) price system function. 
A) economic function of government. 
B) political function of government. 
C) economic and political function of government. 
D) price system function.

Question 18

When there are too few or too many resources going to an economic activity,

Accepted Answer

A) a public good exists. 
B) a market failure exists. 
C) a regressive tax is in place. 
D) a free-rider problem exists. 
A) a public good exists. 
B) a market failure exists. 
C) a regressive tax is in place. 
D) a free-rider problem exists.

Question 19

A government-sponsored good is one that

Accepted Answer

A) is desirable to no one but ruled desirable by the court system nonetheless. 
B) everyone agrees is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) the political process has determined is socially desirable. 
A) is desirable to no one but ruled desirable by the court system nonetheless. 
B) everyone agrees is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) the political process has determined is socially desirable.

Question 20

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ________,and the market demand curve for the product will shift ________.

Accepted Answer

A) to the right; to the right 
B) to the right; to the left 
C) to the left; to the left 
D) to the left; to the right 
A) to the right; to the right 
B) to the right; to the left 
C) to the left; to the left 
D) to the left; to the right

Market failures take place when

The distinguishing characteristic of a public good is

Under present U.S.law,cocaine is an example of

What are the key characteristics of a public good?

A government action that can help correct positive externalities is

Which of the following might be a method that the government could use to correct a negative externality?

When an Australian citizen enjoys military protection in Australia without contributing to the cost of Australia's defense budget,then

All of the following are ways that the government can correct for positive externalities EXCEPT

Which of the following will LEAST likely generate positive external benefits to society?

Which of the following is FALSE about public-sector decision making?

A characteristic of a public good is that a public good is provided

The principal feature of private goods is that

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

My brother decides to leave his empty soda can on someone's lawn.This is an example of a

Providing public goods is a(n)

When there are too few or too many resources going to an economic activity,

A government-sponsored good is one that

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ,and the market demand curve for the product will shift .

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Public Spending and Public Choice

Market failures take place when

The distinguishing characteristic of a public good is

Under present U.S.law,cocaine is an example of

What are the key characteristics of a public good?

A government action that can help correct positive externalities is

Which of the following might be a method that the government could use to correct a negative externality?

When an Australian citizen enjoys military protection in Australia without contributing to the cost of Australia's defense budget,then

All of the following are ways that the government can correct for positive externalities EXCEPT

Which of the following will LEAST likely generate positive external benefits to society?

Which of the following is FALSE about public-sector decision making?

A characteristic of a public good is that a public good is provided

The principal feature of private goods is that

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

-In the above figure,market equilibrium at point E yields the quantity X.The quantity X∗X ^ { * }X∗ is socially optimal amount.The government can achieve the optimal outcome by

My brother decides to leave his empty soda can on someone's lawn.This is an example of a

Providing public goods is a(n)

When there are too few or too many resources going to an economic activity,

A government-sponsored good is one that

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ________,and the market demand curve for the product will shift ________.

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ,and the market demand curve for the product will shift .