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Questions and Answers
What is the primary consequence of market failures?
What is the primary consequence of market failures?
- Reduced prices for consumers
- Net social welfare loss (correct)
- Efficient allocation of resources
- Increased competition among firms
What is an example of a negative externality?
What is an example of a negative externality?
- Pollution (correct)
- Education
- Health care
- Public transportation
What characteristic defines public goods?
What characteristic defines public goods?
- Rivalrous and excludable
- Rivalrous and non-excludable
- Non-rivalrous and non-excludable (correct)
- Non-rivalrous and excludable
What is an example of a merit good?
What is an example of a merit good?
What is a consequence of imperfect competition?
What is a consequence of imperfect competition?
What is an example of asymmetric information?
What is an example of asymmetric information?
What can lead to inefficiencies in the production of goods and services?
What can lead to inefficiencies in the production of goods and services?
What is a consequence of externalities?
What is a consequence of externalities?
What is a characteristic of demerit goods?
What is a characteristic of demerit goods?
What is a consequence of market failures?
What is a consequence of market failures?
What can prevent market economies from being efficient?
What can prevent market economies from being efficient?
What is productive inefficiency?
What is productive inefficiency?
What is the purpose of imposing taxes on negative externalities?
What is the purpose of imposing taxes on negative externalities?
What is the result of allocative inefficiency?
What is the result of allocative inefficiency?
What is the primary goal of cost-benefit analysis?
What is the primary goal of cost-benefit analysis?
What is the outcome of negative externalities?
What is the outcome of negative externalities?
Why do market failures often disproportionately affect the less wealthy?
Why do market failures often disproportionately affect the less wealthy?
What is the purpose of providing subsidies for positive externalities?
What is the purpose of providing subsidies for positive externalities?
What is the result of economic inequities?
What is the result of economic inequities?
What is the role of cost-benefit analysis in public policy?
What is the role of cost-benefit analysis in public policy?
What is the primary reason why firms in private markets cannot easily charge users for public goods?
What is the primary reason why firms in private markets cannot easily charge users for public goods?
What is the term for goods that are underprovided by the market due to their benefits being underestimated?
What is the term for goods that are underprovided by the market due to their benefits being underestimated?
Which of the following is a consequence of imperfect competition in a market?
Which of the following is a consequence of imperfect competition in a market?
What is the result of asymmetric information in a market?
What is the result of asymmetric information in a market?
What is the primary cause of market failures related to the movement of factors of production?
What is the primary cause of market failures related to the movement of factors of production?
What is the term for the costs or benefits of goods and services that are not reflected in market prices?
What is the term for the costs or benefits of goods and services that are not reflected in market prices?
What is the primary reason why market failures can lead to a net social welfare loss?
What is the primary reason why market failures can lead to a net social welfare loss?
What is the term for goods that are overprovided by the market due to their costs being underestimated?
What is the term for goods that are overprovided by the market due to their costs being underestimated?
What is the primary characteristic of markets that are dominated by a small number of firms?
What is the primary characteristic of markets that are dominated by a small number of firms?
What is the primary consequence of the immobility of factors of production?
What is the primary consequence of the immobility of factors of production?
What is a potential consequence of imperfect distribution of income and wealth in a market economy?
What is a potential consequence of imperfect distribution of income and wealth in a market economy?
Which type of inefficiency arises when resources are not allocated according to consumer preferences?
Which type of inefficiency arises when resources are not allocated according to consumer preferences?
What is the primary goal of government intervention in the market to correct market failures?
What is the primary goal of government intervention in the market to correct market failures?
What is the result of negative externalities in a market economy?
What is the result of negative externalities in a market economy?
What is the purpose of cost-benefit analysis in public policy?
What is the purpose of cost-benefit analysis in public policy?
What is a consequence of economic inequities in a market economy?
What is a consequence of economic inequities in a market economy?
What is the purpose of providing public goods directly by the government?
What is the purpose of providing public goods directly by the government?
What is an example of a positive externality?
What is an example of a positive externality?
What is the result of productive inefficiency in a market economy?
What is the result of productive inefficiency in a market economy?
What is the primary role of government in correcting market failures?
What is the primary role of government in correcting market failures?
Which of the following is NOT a type of market failure?
Which of the following is NOT a type of market failure?
What is the primary cause of underproduction of public goods in private markets?
What is the primary cause of underproduction of public goods in private markets?
Which of the following is an example of a demerit good?
Which of the following is an example of a demerit good?
What is the primary consequence of imperfect competition in markets?
What is the primary consequence of imperfect competition in markets?
Which of the following is a characteristic of merit goods?
Which of the following is a characteristic of merit goods?
What is the primary cause of market failures related to the movement of factors of production?
What is the primary cause of market failures related to the movement of factors of production?
Which of the following is NOT a characteristic of public goods?
Which of the following is NOT a characteristic of public goods?
What is the primary reason why asymmetric information can lead to market failures?
What is the primary reason why asymmetric information can lead to market failures?
Which of the following is a consequence of externalities?
Which of the following is a consequence of externalities?
What is the primary goal of government intervention in the market to correct market failures?
What is the primary goal of government intervention in the market to correct market failures?
What is the primary reason why market failures often lead to overproduction of some goods and underproduction of others?
What is the primary reason why market failures often lead to overproduction of some goods and underproduction of others?
Which of the following is a consequence of imperfect distribution of income and wealth in a market economy?
Which of the following is a consequence of imperfect distribution of income and wealth in a market economy?
What is the primary goal of government intervention in the market to correct market failures?
What is the primary goal of government intervention in the market to correct market failures?
What is the primary role of cost-benefit analysis in public policy?
What is the primary role of cost-benefit analysis in public policy?
What is the primary consequence of economic inequities in a market economy?
What is the primary consequence of economic inequities in a market economy?
What is the primary reason why governments impose taxes on negative externalities?
What is the primary reason why governments impose taxes on negative externalities?
What is the primary goal of providing subsidies for positive externalities?
What is the primary goal of providing subsidies for positive externalities?
What is the primary consequence of imperfect distribution of income and wealth on the production of goods and services?
What is the primary consequence of imperfect distribution of income and wealth on the production of goods and services?
What is the primary role of government intervention in correcting market failures related to public goods?
What is the primary role of government intervention in correcting market failures related to public goods?
What is the primary consequence of negative externalities in a market economy?
What is the primary consequence of negative externalities in a market economy?
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