Market Failure

1. Which of the following is / are examples of demerit goods:

Cigarettes

Alchohol

Hard drugs

Child pornography

Options a,b,c and d.

2. When community surplus is not maximised there is:

Market failure

Loss of government revenue

Loss of consumer surplus, but not producer surplus

Loss of producer surplus, but not consumer surplus

Protests from left wing political groups.

3. The reasons why public goods will not be provided in a free market is that they are:

Non-excludable

Non- rivalrous

Characterized by inelastic demand

Characterized by elastic demand

Options a & b.

4. A good is said to be non-excludable if it is ____________________ to stop other people
consuming it once it has been provided.

Possible

Reasonable

Acceptable

Impossible

Normal

5. Most public goods are funded by:

Community donations

Taxpayers

Corporate taxes

Income taxes

Private investors

6. The marginal social benefit is represented by the ________________.

Opportunity cost

Supply curve

Community surplus

Demand curve

All of the above

7. Example(s) of merit goods are:

Education

Health care

Sporting facilities

Public transport

All of the above

8. When examining the topic of market failure, the supply curve can be referred to as the:

Marginal social benefit

Community surplus

Marginal social cost

Producer surplus

Consumer surplus

9. A good is non-rivalrous when:

One person consuming it does not prevent another person from consuming it as well.

One person consuming it does prevent another person from consuming it at the same time.

One person using the product or service trys to stop somebodyelse from using the product.

It does not suffer from the free rider problem

Options b & c.

10. When are profits maximized?

When AR = MC

When MC=MR

When MR=AR

When LRAC = SRAC

When MC=MPC

11. A demerit good may be characterized by:

Negative externalities.

People ignoring the risks associated with consumption.

People being unaware of the risks of using the product.

High government taxes to discourage, reduce or control use.

Options a,b,c and d.

12. Which of the following is not a reason why markets fail?

Lack of Public Goods

Under Supply of Merit Goods

The existence of externalities

Perfect Competition

Imperfect Competition.

13. When community surplus falls from the maximum we say that there has been a

Welfare loss

Producer loss only

Consumer loss only

Declining sales

Options, b, c & d.

14. Producer surplus + consumer surplus equals:

Social efficiency

Profit maxmization

Community surplus

Marginal social cost

Marginal social benefit

15. Which of the following is an example of imperfect competition?

Monopolists restricting output in order to push up prices

Firms engaging in formal and tacit collusion

Price fixing using cartels

Oligopolistic market structures

All of the above.

16. Community surplus cannot be maximized in the real world because:

Markets are influenced by government forces.

Markets are determined by supply and demand concerns.

Profit maximization is always the goal.

There are free market economic policies in most developed countries.

Markets are not perfect.

17. Which of the following merit goods is available at no direct cost to consumers?

Health Care in the United States

Health Care in Sweden

Public Transit in the United States

Sport Facilities in the United Kingdom.

Private Schools in Japan

18. When a market is in equilibrium with no external influences and no external effects, it is said to be in a state of _____________ optimality

Community

Pareto

Efficient

Producer

Consumer

19. An example of a quasi public good that could be supplied by the free market is:

National defence

Street lights

Customs and border security

Immigration services

Court system

20. Merits good are characterized by:

Positive externalities.

Negative externalities

Underestimation of the benefits of the product or service

Private and government providers in most cases.

Option a, c and d.

21. When market failure occurs governments may intervene in order to:

Restore market equilibrium

Reduce company profits, and increase producer surplus

Move towards the optimal allocation of resources

Increase consumer surplus, but not producer surplus

All of the above.

22. Many countries have a monopolies commission or a monopoly watchdog.
In United States this is called:

The US Competition and Consumer Commission

The US Fair Trade Commission

Federal Trade Commission

The Consumer Affairs Bureau

None of the above

23. In a pure free market, there would be under consumption and under supply of merit goods because:

Government subsidies may be reduced

People would have to pay the full cost for these services.

They are normally unpopular with consumers

All citizens would have private coverage and insurance

All of the above.

24. Public goods are

Goods and services which are provided by the public and private sectors.

Goods and services which are are not provided by the free market.

Lacking in a free market situation. An example of marketfailure.

Schools, universities and libraries.

Options b & c.

25. In order to reduce or restrict market share, governments may:

Outlaw oligopoly market structures

Stop mergers or takeovers that give an individual firm more than a certain percentage of the market.

Implement anti-trust laws.

Impose additional taxes on large firms

Both options b & c.

Market Failure

1. Which of the following is / are examples of demerit goods:

2.

What first name or nickname would you like us to use?

2. When community surplus is not maximised there is:

3. The reasons why public goods will not be provided in a free market is that they are:

4. A good is said to be non-excludable if it is ____________________ to stop other peopleconsuming it once it has been provided.

5. Most public goods are funded by:

6. The marginal social benefit is represented by the ________________.

7. Example(s) of merit goods are:

8. When examining the topic of market failure, the supply curve can be referred to as the:

9. A good is non-rivalrous when:

10. When are profits maximized?

11. A demerit good may be characterized by:

12. Which of the following is not a reason why markets fail?

13. When community surplus falls from the maximum we say that there has been a

14. Producer surplus + consumer surplus equals:

15. Which of the following is an example of imperfect competition?

16. Community surplus cannot be maximized in the real world because:

17. Which of the following merit goods is available at no direct cost to consumers?

18. When a market is in equilibrium with no external influences and no external effects, it is said to be in a state of _____________ optimality

19. An example of a quasi public good that could be supplied by the free market is:

20. Merits good are characterized by:

21. When market failure occurs governments may intervene in order to:

22. Many countries have a monopolies commission or a monopoly watchdog.In United States this is called:

23. In a pure free market, there would be under consumption and under supply of merit goods because:

24. Public goods are

25. In order to reduce or restrict market share, governments may:

4. A good is said to be non-excludable if it is ____________________ to stop other people
consuming it once it has been provided.

22. Many countries have a monopolies commission or a monopoly watchdog.
In United States this is called: