Econ ch.12 & 13 ALL QUESTIONS

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 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

What is one reason that firefighter services are considered a public good?

• Everyone in the community benefits from it.

• Nobody in the community has to pay for it.

• Private firms make a profit from producing it

• Individual citizens pay directly for it.

Which of the following is an example of a negative externality resulting from an outdoor concert in the park?

• College students near by get to enjoy free entertainment

• An elderly woman in her apartment hears a song that she liked as a child.

• A pizza parlor stays open later and makes a bigger profit than most nights

• A traffic jam occurs as drivers hunt for parking spots near the concert.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good?

• Fireworks displays usually take place in a public area.

• Fireworks are a scarce resource.

• Nonpayers cannot be prevented from seeing the fireworks.

• Each consumer pays a fee to see the fireworks.

If a student volunteers at a food pantry on Fridays after school, which of the following might be a negative externality?

• The student might learn a new skill.

• The student might make some new friends.

• The student's parents have to drive him or her to the food pantry.

• The student might decide to volunteer two days a week.

A cattle ranch decides to expand its operations. Which of the following would be a negative externality for the local environment?

• Less use of renewable resources

• Less land for development

• Higher property taxes

• More groundwater pollution

Thirty nations sign a treaty pledging limits on CO2 emissions and the development of renewable resource energy production. Which of the following would be a long-term positive externality for global health?

• Increased land allocation for wind farms

• More manufacturing of vaccines

• Lower rates of childhood asthma

• Reduction of vitamin deficiencies in children

Which of the following means "costs or benefits to third parties"?

• free riders

• incentives

• externalities

• inefficiencies

When consumption of a good generates a positive externality, which of the following must be true at the market equilibrium? 

• Marginal social benefit is less than marginal private cost. 
• Marginal social benefit is greater than marginal private benefit. 
• Marginal social cost is greater than marginal social benefit. 
• Marginal social cost is less than marginal private benefit.