Quiz #8 Market failure

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

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 ______________.

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 _________________.

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

When there is 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 _____.

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 _______ market.