Market Failure & Government Intervention

What is a public good?

• A good that is both non-excludable and non-rivalrous

• A good that is excludable but non-rivalrous

• A good that is non-excludable but rivalrous

• A good that is both excludable and rivalrous

What is an externality?

• A benefit or cost that affects a third party not directly involved in the market transaction

• A cost that affects only the buyer in a market transaction

• A benefit that affects only the seller in a market transaction

• A benefit or cost that only affects the buyer and seller in a market transaction

What is asymmetric information?

• Information that is only known to the seller in a market transaction

• Information that is only known to the buyer in a market transaction vice versa

• Information that is known to both the buyer and seller in a market transaction

• Information that is not known to either the buyer or seller in a market transaction

What is a common access resource?

• A resource that is both non-excludable and non-rivalrous

• A resource that is excludable but non-rivalrous

• A resource that is non-excludable but rivalrous

• A resource that is both excludable and rivalrous

What is the role of indirect taxation in addressing market failure?

• To encourage the consumption of a good

• To discourage the consumption of a good

• To provide a revenue source for the government

• To provide a subsidy for the production of a good

What is the effect of subsidies in addressing market failure?

• To encourage the consumption of a good

• To discourage the consumption of a good

• To increase the price of a good

• To decrease the price of a good

What is the role of regulations in addressing market failure?

• To encourage the consumption of a good

• To discourage the consumption of a good

• To provide a revenue source for the government

• To ensure that market transactions are conducted fairly and efficiently

What is the effect of advertising in addressing market failure?

• To increase the demand for a good

• To decrease the demand for a good

• To provide information about a good

• To increase the supply of a good

What is the primary goal of government intervention in the market?

• To increase the price of goods

• To decrease the price of goods

• To increase government revenue

• To address market failure and promote market efficiency