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ch11 - File Ch11 CHAPTER 11 Regulation Public Goods and...

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File: Ch11; CHAPTER 11: Regulation, Public Goods, and Benefit-Cost Analysis Each question contains a code showing the section of the chapter text from which it was taken. The codes for this chapter are: Code Section 1 Market Failure Due to Monopoly 2 Market Failure Due to Externalities 3 Market Failure Due to Imperfect Information 4 Public Goods 5 The Basics of Benefit-Cost Analysis 6 Evaluating a Public Project 7 Valuing Benefits and Costs MULTIPLE CHOICE 1. Market efficiency is typically achieved by a) A small number of dominant oligopolists whose large size ensures low cost. b) Leading firms that practice genuine social responsibility. c) Competitive firms that produce goods at minimum cost and that maximize benefits for consumers. d) Command-and-control type regulations. e) Answers b and c are both correct. ANSWER: c SECTION: 1 2. An efficient competitive outcome means that 3. Market failures are usually caused by 11-1
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Regulation, Public Goods, and Benefit-Cost Analysis 4. Compared to perfect competition, monopolized markets result in 5. Antitrust actions are intended to a) Remedy problems caused by imperfect information. b) Break up mega-firms when they grow too large. c) Reduce excessive windfall profits earned by firms. d) Prevent firm behavior that leads to the monopolization of markets. e) Answers b, c, and d are all correct. ANSWER: d SECTION: 1 6. The normal regulatory response in the case of a natural monopoly is
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