Econ1B Quiz4 - Econ 1B: Quiz 4 (UNIT 3) Multiple Choice...

Econ 1B: Quiz 4 (UNIT 3)
Multiple Choice
Identify the choice that best completes the statement or answers the question.
__A__ 1. Market failure is a situation in which
a. the market does not provide the ideal or optimal amount of a particular good.
b. there are too many buyers but not enough sellers.
c. prices are too high for "average" people to buy necessities.
d. there is a question over the quality of a product for sale.
__B__ 2. Sometimes, when goods are produced and consumed, side effects are felt by people who are not directly
involved in the market exchanges. In general, these side effects are called
Refer to Exhibit 16-1. This graph represents a negative externality situation. Given this, which of the two
curves, X or Y, represents marginal social costs and why?

Exhibit 16-2