A Level Economics 1.3.3, 1.3.4 Public goods, Information gaps

When individuals act more recklessly because they are insured, what is this an example of?

• When businesses refuse to disclose product defects

• When consumers refuse to purchase insurance

• When governments intervene in free markets

• When individuals act more recklessly because they are insured

How can failing to disclose information lead to market failure?

• It ensures fair pricing

• It leads to incorrect pricing decisions

• It increases consumer trust

• It encourages more competition

What is an example of a quasi-public good?

• A toll road

• A park

• National defense

• A smartphone

What does "non-excludable" mean in the context of public goods?

• Anyone can consume the good without being stopped, even without paying

• The good can be excluded from certain individuals

• It is available only to those who pay

• It is too expensive for most people

What is a key characteristic of public goods?

• They are always profitable

• They are rival and excludable

• They are non-rival and non-excludable

• They are only provided by the private sector

What is the "free-rider problem"?

• When consumers pay more than the actual cost of a good

• When people benefit from a good without paying for it

• When producers raise prices to maximize profits

• When buyers and sellers have asymmetric information

Why are businesses reluctant to supply public goods?

• The goods are too expensive to produce

• Free-riders make it difficult to earn profits

• Consumers refuse to buy them

• Governments ban private supply

What is a "private good"?

• A good that is both rival and excludable

• A good that is non-rival and non-excludable

• A good provided only by the government

• A good with significant externalities

How does moral hazard arise in insurance markets?

• Consumers refuse to disclose their risks

• Insured individuals take fewer precautions because they are protected

• Insurers refuse to cover certain risks

• Governments over-regulate the insurance industry

What happens in a market with asymmetric information?

• Both buyers and sellers benefit equally

• Consumers are always overcharged

• One party makes decisions with less information than the other

• The government regulates the market