This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Failures > Market Failures – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is Internalizing the Externality? A) Altering incentives so that people take account of the external effects of their actions. B) External benefits. C) External costs. D) None of above. Show Answer Correct Answer: A) Altering incentives so that people take account of the external effects of their actions. 2. Which is not an example of a public good? A) Target. B) Legacy High School. C) Big Dry Creek Open Space. D) Broomfield Water. Show Answer Correct Answer: A) Target. 3. Government regulation may negatively affect businesses in the following ways by A) Increasing input costs. B) Increasing profits. C) Lowering consumer prices. D) All of the above. Show Answer Correct Answer: A) Increasing input costs. 4. How much will the UK economy shrink by in 2023? A) 2.4%. B) 0.1%. C) 1.4%. D) 0.4%. Show Answer Correct Answer: D) 0.4%. 5. Rival in consumption & not excludable A) Common Resources. B) Club Goods. C) Private Goods. D) Public Goods. Show Answer Correct Answer: A) Common Resources. 6. A positive externality will cause a market to produce ..... A) More than is socially desirable. B) Less than is socially desirable. C) The socially optimal equilibrium amount. D) More than the same market would produce in the presence of a negative externality. Show Answer Correct Answer: B) Less than is socially desirable. 7. The ability of a firm or a group of firms to control the price of the product they sell A) Monopoly/Market Power. B) Common Access Resources. C) Asymmetric Information. D) Sustainability. Show Answer Correct Answer: A) Monopoly/Market Power. 8. Products where social benefits to the community outweighs the private benefits to the consumer: A) Merit goods. B) Public goods. C) Economic goods. D) Demerit goods. Show Answer Correct Answer: A) Merit goods. 9. A congested road is an example of A) Public good. B) Common resource. C) Private goods. D) Club goods. Show Answer Correct Answer: B) Common resource. 10. Complete market failure always exists when A) There are negative externalities in production. B) There is a missing market in the provision of public goods. C) The free market fails to provide sufficient merit goods. D) The free market underprices demerit goods. Show Answer Correct Answer: B) There is a missing market in the provision of public goods. 11. Above-equilibrium wages paid by firms to increase worker productivity A) Strike. B) Utility. C) Efficiency Wages. D) Union. Show Answer Correct Answer: C) Efficiency Wages. 12. The federal government's role in providing aid to the poor and the aged is justified because of concerns about A) Restricted supply. B) Inequity. C) Market power. D) Macro failure. Show Answer Correct Answer: B) Inequity. 13. "Once a public good is produced, anyone can enjoy it, even those who did not pay for its consumption." This statement describes which economic concept? A) An absence of private property rights. B) Free-rider problem. C) Government Failure. D) None of above. Show Answer Correct Answer: B) Free-rider problem. 14. We may minimize market failure related to a public good by: A) Restricting access to only those who pay. B) Providing the good using taxation revenue. C) Depending on the private sector to supply it. D) Excluding those who want to freeride. Show Answer Correct Answer: B) Providing the good using taxation revenue. 15. Costs to producers of producing one more unit of a good A) Externality. B) Market Failure. C) Marginal Social Costs. D) Marginal Private Costs. Show Answer Correct Answer: D) Marginal Private Costs. 16. The ups and downs of the economy, which the government must sometimes step in to stabilize due is known as the A) Business cycle. B) Monetary Policy. C) Regulatory cycle. D) Fiscal Policy. Show Answer Correct Answer: A) Business cycle. 17. What is the name of people who benefit without paying? A) Free riders. B) Free takers. C) Free loaders. D) None of above. Show Answer Correct Answer: A) Free riders. 18. A formal agreement to set prices or to otherwise behave in a cooperative manner A) Non-price competition. B) Collusion. C) Deregulation. D) All the above. Show Answer Correct Answer: B) Collusion. 19. An economic good is one which A) Does not use up resources. B) Is supplied competitively. C) Makes a profit. D) Has an opportunity cost in production. Show Answer Correct Answer: D) Has an opportunity cost in production. 20. Is competition among restaurants in big cities a good example of monopolistic competition? A) Unsure. B) No. C) I think so?. D) Yes. Show Answer Correct Answer: D) Yes. 21. Regulatory policies are rules established by ..... decree. A) Private. B) Social. C) Government. D) Market. Show Answer Correct Answer: C) Government. 22. A pure public good is always A) Provided by the government for all consumers. B) Provided free of charge because there is no opportunity cost. C) Available for consumption by others when consumed by an additional person. D) Heavily subsidised by the government. Show Answer Correct Answer: C) Available for consumption by others when consumed by an additional person. 23. A good is excludable if A) One person's use has no effect on the quantity available for someone else. B) It is supplied by the government rather than through the free market. C) It is possible to prevent someone from enjoying its benefits. D) It is supplied at zero price. Show Answer Correct Answer: C) It is possible to prevent someone from enjoying its benefits. 24. Tend to have positive externalities A) Demerit goods. B) Economic goods. C) Merit goods. D) Private goods. Show Answer Correct Answer: C) Merit goods. 25. How principals may respond to the principal-agent problem A) Better monitoring. B) Higher Wages. C) Delayed payments. D) All of the above. Show Answer Correct Answer: D) All of the above. 26. The price you pay for a security system for your home A) External benefits. B) External costs. C) Private benefits. D) Private costs. Show Answer Correct Answer: D) Private costs. 27. What government agency is designed to oversee mergers between companies to ensure fair competition in a market? A) Department of Agriculture. B) Treasury. C) ACCC. D) DFAT. Show Answer Correct Answer: C) ACCC. 28. What is the key to how the market economy works A) Price mechanism. B) Demand. C) Supply. D) Demand and supply. Show Answer Correct Answer: A) Price mechanism. 29. Which of the following market structures is considered a price maker(the business sets the price and has control over the price)? A) Monopolistic competition. B) Perfect competitiion. C) Oligopoly. D) Monopoly. Show Answer Correct Answer: D) Monopoly. 30. An externality is a side effect of production or consumption that has consequences A) For consumers only. B) For people other than the producer or consumer. C) For producers and consumers. D) For producers only. Show Answer Correct Answer: B) For people other than the producer or consumer. Next →Related QuizzesMicroeconomics QuizzesEconomics QuizzesMarket Failures Quiz 2Market Failures Quiz 3Market Failures Quiz 4Market Failures Quiz 5Market Failures Quiz 6Market Failures Quiz 7Market Failures Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books