Market Failures

Which best describes a public good?

• A good that produces no externalities

• A good that exists only in a free market

• A good provided by the government 

• A good purchased by individuals

A market failure is best described as

• The concept that a decision made by one party can have negative effects on another party

• 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 positive effects on another party

The following statements are true of government regulations except

• They limit economic freedom

• They seek to limit negative externalities

• They exist to protect consumers

• They are always popular with private businesses

Which is not an example of a government safety net?

• Consumer Safety 

• Medicaid

• Unemployment Insurance

• Social Security

Which is not an example of a public good?

• Lighthouse

• Legacy High School

• Street lighting

• Oil

Safety nets, in the context of market failure, are 

• Goods that are not safe, equitable, and profitable in the market 

• Programs that help people who are struggling

• Designed to minimize external costs and shift the costs back to the producers

• Payments given by the government to private companies as an incentive for them to produce a certain good

Government regulations exist to

• Protect consumers from negative externalities

• Provide incentives to privatize

• Increase economic freedom

• Punish people who intervene in the free market

Government regulation may negatively affect businesses in the following ways by

• Increasing input costs

• Lowering consumer prices

• Increasing profits

• All of the above

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Which is not an example of a publicly owned industry intended to provide goods and services more efficiently to the public?

• Postal service

• Airline industry

• Public transportation

• Utilities such as gas, water, electric

Market failures occur when

• a command economy increases production

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

• the economy has a strong GDP

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