Market Failure JC1

Which of the following are characteristics of a public good.

1. They are non-excludable

2. They are non-rivalrous

3. They are not scarce and have infinite supply

• 1 only

• 1 and 2 only

• 2 and 3 only

• 1,2 and 3

Which of the following is an example of pure public good.

• A motorway

• Primary education

• A naional flood barrier

• Health care

Which of the following is not a means of reducing negative externalities of production and reducing the threats to common pool resources?

• International environmental agreements

• Tradable permits

• Free trade

• Carbon taxes

   

Which of these are characteristics of common pool resources?

• Excludable and rivalrous

• Non-excludable and non-rivalrous

• Excludable and non-rivalrous

• Non-excludable and rivalrous

If a firm is creating negative externalities of production by generating undisposed waste, how may a government internalize the externality?

• Subsidizing other firms that are not creating waste.

• Subsidizing the firm to reduce their costs.

• Imposing a Pigouvian tax on the firm.

• Paying for the disposal of the waste.

Negative externalities of production occur when the production of a good or service:

• causes a firm’s private costs to increase.

• creates external costs that are damaging to third parties.

• causes a firm to make losses.

• cause negative external costs to consumers of the good or service.

Which of the following government policies will help to achieve positive externalities of consumption of a product?

• Imposing an indirect tax on the product.

• Restricting supply of the product.

• Subsidizing the product.

• Negative advertising regarding the product.

Which of the following is a merit good?

• An economics textbook.

• A laptop computer.

• A flu inoculation.

• A trip to the zoo.

When a positive externality of consumption exists in a market, without government intervention, at which point will people consume?

• Marginal Social Benefit = Marginal Private Benefit

• Marginal Social Benefit = Marginal Social Cost

• Marginal Social Cost = Marginal Private Benefit

• Marginal Social Cost = Marginal Private Cost

A market failure occurs when

• MSC = MSB

• there is allocative efficiency.

• community surplus is not maximized.

• there is perfect information.