Some very quick MC questions

What is the socially optimum output?

• MSB = MSC
• MSB > MSC
• MSB < MSC
• None of the above

What is allocative efficiency?

• MSB = MSC
• MSB > MSC
• MSB < MSC
• None of the above

What is the term used to describe positive externalities of production and consumption?

• Merit goods
• Demerit goods
• Normal goods
• Inferior goods

What is the term used to describe negative externalities of production and consumption?

• Demerit goods
• Merit goods
• Normal goods
• Inferior goods

What is the tragedy of the commons?

• Unsustainable production creating negative externalities
• Rivalrous but non-excludable resources
• Market failure due to negative externalities of production
• None of the above

What is a common pool resource?

• Rivalrous but non-excludable
• Non-rivalrous and non-excludable
• Rivalrous and excludable
• Non-rivalrous and excludable

What is the term used to describe goods that are non-rivalrous and non-excludable?

• Public goods
• Private goods
• Club goods
• Common goods

What is the free rider problem?

• When people consume a good without paying for it
• When people overconsume a good
• When people underconsume a good
• None of the above

What is adverse selection?

• When one party in a transaction has more information than the other
• When the presence of insurance causes people to take on more risk
• When the quality of a good is difficult to observe
• None of the above

What is moral hazard?

• When one party in a transaction has more information than the other
• When the presence of insurance causes people to take on more risk
• When the quality of a good is difficult to observe
• None of the above