Lesson 4.02 - The Sources of Market Failure

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Multiple Choice

Governments can intervene in the market for the good of the public. Which of the following is a positive example of government intervention?

• antitrust laws

• taxes

• government-run industries

Multiple Choice

Systematic overproduction or underproduction where producers and consumers do not have to bear the full costs of the transactions is called what?

• supply

• market practices

• demand

• market failures

Multiple Choice

Which of the following is a positive externality?

• education

• pollution

• oil spill

• contamination of rivers

Multiple Choice

There are at least 3 causes of market failures. Which of the following options is NOT a cause of market failure?

• inadequate competition

• failure to provide goods

• large corporations

• imperfect information

Multiple Choice

Which market failure is caused when a monopoly exists?

• inadequate competition

• failure to provide goods

• large corporations

• imperfect information

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Multiple Choice

Medical care is provided to low-income individuals at no cost.

• public good

• imperfect information

• externality

• inequity

• market power

Multiple Choice

Smoking is prohibited in public spaces.

• public good

• imperfect information

• externality

• inequity

• market power

Multiple Choice

The only two firms in a market are not allowed to merge.

• public good

• imperfect information

• externality

• inequity

• market power

Multiple Choice

A city provides a public park for all of its citizens to enjoy.

• public good

• imperfect information

• externality

• inequity

• market power

Multiple Choice

Product labels are required to include the number of servings and serving size.

• public good

• imperfect information

• externality

• inequity

• market power

Multiple Choice

An externality occurs when one person's use of their property does what?

• Supports the government

• Provides a benefit (or cost) to someone else

• Does not benefit them

• Falls outside the market

Multiple Choice

Inequity exists when there is what type of resource allocation?

• unfair

• unequal

• inefficient

• unsustainable

Multiple Choice

A wild animal represents which type of market failure?

• public good

• externality

• adverse selection

• monopoly

Multiple Choice

Why does the government enforce standards of weights and measures?

• To help businesses earn profits

• To provide public goods

• To ensure consumers can weigh costs and benefits

• To alleviate externalities

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