Quiz #8 Market failure

1. People who do not pay for a good or service but enjoy the benefits are known as (a)   .

1. Consumption by a public good by one individual does not reduce the amount available for other individuals to consume. This term is known as (a)   .

Goods which the social benefits to the community of the consumption of the good far outweigh the private benefits to the consumer are known as _______________.

• public goods

• Merit goods

• externalities

• Monopolies

Spillover effects of production or consumption that fall on a third party is described as _____________.

• externalities

• merit good

• public goods

• Monopolies

Streetlights, lighthouse and defense are all examples of (a)   .

When too little of a good is being produced in the market, it causes marker failure as a form of (a)   externality.

When there is a (a)   externality, a cost falls on a third party and is in no way compensated for this cost. Too much of the good is being  produced.

Government can encourage firms that are producing positive externalities to produce (a)   .

The noise of your neighbor's CD disturbing your afternoon nap is an example of a

• merit good

• demerit good

• negative externality

• positive externality

Public goods are a cause of market failure because there is a case of a (a)   market.