Market Failure Quiz 1

Which of the following is most likely to be considered a public good?

• Radio broadcasts

• Roads

• Education

• Fruit and vegetables

Public goods have the following features:

• They are excludable and rivalrous in consumption

• They are excludable and non-rivalrous in consumption

• They are non-excludable and rivalrous in consumption

• They are non-excludable and non-rivalrous in consumption

Which of the following is unlikely to be provided in a free market?

• Street Lights

• Roads

• Education

• Healthcare

Which of the following is the least convincing reason for government intervention in markets?

• Pollution from factories

• Non production of socially desirable such as defence or prisons

• An underallocation of resources to the production of goods with positive externalities in consumption

• Higher prices of goods and services over time

Which of the following forms of market failure features ‘goods’ or ‘resources’ that are characterised as ‘non-rival’ (i.e. ‘non-depletable’)?

• Asymmetric information

• Public goods

• Positive externalities

• Negative externalities

Which of the following is likely to lead to an expansion in the demand for vaccinations:

• A subsidy paid to hospitals to reduce the costs of providing vaccinations

• The ‘No Jab No Pay,’ initiative which reduces government subsidies to families who don’t vaccinate their children

• Government funded advertising campaigns outlining the benefits of vaccinating your children

• A grant paid directly to parents to encourage them to vaccinate their children

The degree of competition in a market is likely to fall when:

• There is a large number of buyers and sellers

• Firms are able to develop brand loyalty

• Consumers have access to more information

• There are low set up costs

A benefit associated with higher levels of competition is:

• A greater degree of brand loyalty

• Production methods are more environmentally friendly

• The achievement of economies of scale

• Firms seek the least cost methods of production

In a free market public goods are likely to

• Be unprofitable for private firms due to the free rider problem

• Be provided by publicly-listed companies

• Include goods like iron ore and coal

• Over produced without government intervention

Common access resources have the following features:

• They are excludable and rivalrous in consumption

• They are non-excludable and non-rivalrous in consumption

• They are non-excludable and rivalrous in consumption

• They are excludable and non-rivalrous in consumption