Market Failure

Front

Society achieves allocative efficiency when

Back

marginal social benefits = marginal social cost

Front

The price mechanism may allocate resources efficiently in the case of: public goods, private goods, non-excludable goods, non-rivalrous goods

Back

private goods

Front

Which of the following is not a cause of market failure? Options: the presence of common pool resources such as forests and oceans, the existence of public goods, the presence of externalities, the presence of maximum social surplus

Back

the presence of maximum social surplus

Front

An externality is present when

Back

activities of producers and consumers affect the well being of third parties whose interests are not taken into account

Front

A negative externality arising from the production of good Z leads to

Back

an overallocation of resources to the production and consumption of good Z

Front

Negative production externalities due to the use of fossil fuels arise because

Back

firms ignore the costs they impose on bystanders

Front

Market-based policies to reduce the external costs arising from the use of fossil fuels do not include: tradable permits, carbon taxes, indirect taxes, collective self - governance

Back

collective self - governance

Front

The use of cars usually leads to ________ because ________

Back

negative consumption externalities / MPB > MSB

Front

Demerit goods are often _____________________ due to _____________________.

Back

overprovided by the market / negative consumption externalities

Front

Negative consumption externalities are unlikely to be dealt with through the use of: indirect taxes, legislation, advertising, tradable permits

Back

tradable permits