WorksheetsMarket Failure JC1
Total questions: 10
Worksheet time: 4mins
Which of the following are characteristics of a public good.
1. They are non-excludable
2. They are non-rivalrous
3. They are not scarce and have infinite supply
1 only
1 and 2 only
2 and 3 only
1,2 and 3
Which of the following is an example of pure public good.
A motorway
Primary education
A naional flood barrier
Health care
Which of the following is not a means of reducing negative externalities of production and reducing the threats to common pool resources?
International environmental agreements
Tradable permits
Free trade
Carbon taxes
Which of these are characteristics of common pool resources?
Excludable and rivalrous
Non-excludable and non-rivalrous
Excludable and non-rivalrous
Non-excludable and rivalrous
If a firm is creating negative externalities of production by generating undisposed waste, how may a government internalize the externality?
Subsidizing other firms that are not creating waste.
Subsidizing the firm to reduce their costs.
Imposing a Pigouvian tax on the firm.
Paying for the disposal of the waste.
Negative externalities of production occur when the production of a good or service:
causes a firm’s private costs to increase.
creates external costs that are damaging to third parties.
causes a firm to make losses.
cause negative external costs to consumers of the good or service.
Which of the following government policies will help to achieve positive externalities of consumption of a product?
Imposing an indirect tax on the product.
Restricting supply of the product.
Subsidizing the product.
Negative advertising regarding the product.
Which of the following is a merit good?
An economics textbook.
A laptop computer.
A flu inoculation.
A trip to the zoo.
When a positive externality of consumption exists in a market, without government intervention, at which point will people consume?
Marginal Social Benefit = Marginal Private Benefit
Marginal Social Benefit = Marginal Social Cost
Marginal Social Cost = Marginal Private Benefit
Marginal Social Cost = Marginal Private Cost
A market failure occurs when
MSC = MSB
there is allocative efficiency.
community surplus is not maximized.
there is perfect information.
