Economics Chapter 2 Review

Which best describes a public good?

• A good provided by the government 
• A good purchased by individuals
• A good that exists only in a free market
• A good that produces no externalites

A market failure is best described as

• The idea that market forces of supply and demand always provide the maximum benefit for society
• The idea that market forces of supply and demand do not always provide the maximum benefit for society
• The concept that a decision made by one party can have negative effects on another party
• The concept that a decision made by one party can have positive effects on another party

Which is not an example of a public good?

• Legacy High School
• Big Dry Creek Open Space
• Target
• Broomfield Water

Government regulations exist to

• Increase economic freedom
• Protect consumers from negative externalities
• Punish people who intervene in the free market
• Provide incentives to privatize

Market failures occur when

• the accumulation of wealth in the free market is shared between a large group of people

• a command economy increases production

• the economy has a strong GDP and low interest rates

• the distribution of goods and services in the free market is not efficient and leads to loss of social wellbeing

A situation of market failure is said to exist if;

• buyers and sellers pay for the true opportunity costs of their actions

• there are no externalities

• the government provides merit goods free

• third parties in society are affected and not compensated

When social costs are greater than private costs, there is a;

• positive externality

• negative externality

• less than socially optimal output

• socially optimal output

Which of the following industries is an example of a monopoly?

• utilities/water

• department stores

• auto industry

• commercial airlines

Negative externalities can be best described as

• When the consumption/production of a good or service has a negative impact on a third party

• When the consumption/production of a good or service has any impact on a third party

• When the consumption/production of a good or service has a positive impact on a third party

• When the consumption/production of a good or service depletes the access for a third party

Which law bans monopolies?

• Tea Act
• Anti-Trust Act
• Townsend Act
• Monopoly Act