ArCh31_10e.doc - Chapter 31—Market Failure: Externalities,...

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Chapter 31—Market Failure: Externalities, Public Goods, and AsymmetricInformationMULTIPLE CHOICE1.Market failure is a situation in whicha.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.ANS: APTS:1DIF:EasyNAT:Analytic
LOC:Markets, market failure, and externalities2.Sometimes, when goods are produced and consumed, side effects are felt by people who arenot directly involved in the market exchanges. In general, these side effects are calledPTS:1DIF:EasyNAT:Analytic
LOC:Markets, market failure, and externalities3.A side effect of an action that adversely affects the well-being of others is called aPTS:1DIF:EasyNAT:Analytic
LOC:Markets, market failure, and externalities4.A negative externality isPTS:1DIF:EasyNAT:Analytic
LOC:Markets, market failure, and externalities5.Negative externalities that arise from the production of a gooda.cause an increase in the demand for the good.b.cause a decrease in the demand for the good.c.impose costs on third parties.d.bring private costs into equality with social costs.ANS: CPTS:1DIF:EasyNAT:Analytic
LOC:Markets, market failure, and externalities948
6.Which of the following situations probably wouldnotyield anegative externality?PTS:1DIF:ModerateNAT:Analytic
LOC:Markets, market failure, and externalities7.When negative externalities are connected with the production of a good,PTS:1DIF:ModerateNAT:Analytic
LOC:Markets, market failure, and externalities

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Term
Spring
Professor
CaraTucker
Tags
Externality, A C Pigou

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