This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Failures > Market Failures – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Supply and Demand is closely related to which? A) Monopoly. B) Perfect competition. C) Cultural Fairness. D) Government Regulation. Show Answer Correct Answer: B) Perfect competition. 2. What is an example of a negative consumption externality? A) Increased standards of education in schools. B) Increased research and development into cancer prevention. C) Health impacts for society of passive tobacco smoking. D) Environmental Pollution. Show Answer Correct Answer: C) Health impacts for society of passive tobacco smoking. 3. How are social costs calculated? A) Social benefits less external costs. B) Fixed costs plus variable costs. C) Private benefits less private costs. D) Private costs plus external costs. Show Answer Correct Answer: D) Private costs plus external costs. 4. What makes the supply of a product more elastic? A) It is a necessity and with no substitutes. B) It cannot be stored easily and costlier to store. C) It can be produced easily in less time. D) Altering cost of the product is high. Show Answer Correct Answer: C) It can be produced easily in less time. 5. The following exists so that it can protect the public from natural market forces that may lead to a lack of competition A) Excise taxes. B) Subsidies. C) Safety nets. D) Anti-competitive laws. Show Answer Correct Answer: D) Anti-competitive laws. 6. In Public goods, what is meant by the property of non-rivalry? A) Marginal cost is zero. B) Marginal cost of an additional user is zero. C) Marginal cost is high. D) Marginal cost of an additional user is high. Show Answer Correct Answer: B) Marginal cost of an additional user is zero. 7. The role of government in a market system A) Does not exist. B) Includes improving situations that would otherwise result in a market failure. C) Is restricted to establishing property rights. D) Includes improving on situations that would otherwise result in a government failure?. Show Answer Correct Answer: B) Includes improving situations that would otherwise result in a market failure. 8. A free good has: A) Excludability. B) Has a price. C) An opportunity cost. D) No opportunity cost. Show Answer Correct Answer: D) No opportunity cost. 9. More harmful than customers realize: A) Economic goods. B) Demerit goods. C) Private goods. D) Merit goods. Show Answer Correct Answer: B) Demerit goods. 10. What is the underlying mechanism which explains why a good does not become a private one? A) Negative Externalities. B) Free Rider Problem. C) Positive Externalities. D) Tragedy of the Commons. Show Answer Correct Answer: B) Free Rider Problem. 11. Once the government has funded the armed forces nobody within its territory can be prevented from benefiting from the protection provided. What quality of the armed forces (as a service) is this a result of? A) Non-rivalry. B) Rivalry. C) Non-excludability. D) Excludability. Show Answer Correct Answer: C) Non-excludability. 12. Products that society deems as bad for you and is thought to be overprovided by the market A) Demerit goods. B) Common Pool Resources. C) Merit goods. D) Public goods. Show Answer Correct Answer: A) Demerit goods. 13. If firms are competitive and profit-maximizing, the demand curve for labor is determined by A) The opportunity cost of workers' time. B) The value of the marginal product of labor. C) Offsetting income and substitution effects. D) The value of the marginal product of capital. Show Answer Correct Answer: B) The value of the marginal product of labor. 14. In this market structure, products are similar but have some differences. A) Monopoly. B) Perfect Competition. C) Monopolistic Competition. D) Oligopoly. Show Answer Correct Answer: C) Monopolistic Competition. 15. This market structure can act like a monopoly when the firms all set prices the same A) Oligopoly. B) Monopolistic Competition. C) Monopoly. D) Perfect Competitio. Show Answer Correct Answer: A) Oligopoly. 16. Excludable & not rival in consumption A) Public Goods. B) Private Goods. C) Common Resources. D) Club Goods. Show Answer Correct Answer: D) Club Goods. 17. A firm produces a good with a price elasticity of demand greater than 1. What must the firm experience if there is a fall in the price of this good? A) A decrease in costs. B) An increase in revenue. C) A decrease in sales. D) An increase in profits. Show Answer Correct Answer: B) An increase in revenue. 18. ..... are situations when there's an external costs or external benefits that accrue to other people or society as a whole. A) Externalities. B) Internalities. C) Progressives. D) None of above. Show Answer Correct Answer: A) Externalities. 19. Refers to situations where buyers and sellers do not have equal access to information, and usually results in an under-allocation of resources to the production of goods and services A) Common Access Resources. B) Asymmetric Information. C) Sustainability. D) Monopoly/Market Power. Show Answer Correct Answer: B) Asymmetric Information. 20. What is an example of an external cost? A) The cost of industrial pollution. B) A company's transport costs. C) The cost of buying components from suppliers. D) The cost of bringing about a merger. Show Answer Correct Answer: A) The cost of industrial pollution. 21. Partial market failure exists when: A) A product is both non-excludable and non-rival. B) There is excess supply in a market at the current market price. C) A market exists but there is under-provision. D) The market can only be competitive with government subsidies. Show Answer Correct Answer: C) A market exists but there is under-provision. 22. What is Positive 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: B) External benefits. 23. Which one of the following is associated with a missing market? A) A firm deciding to produce a private good. B) A monopoly restricting output. C) The production of a negative externality. D) A government subsidising agricultural production. Show Answer Correct Answer: C) The production of a negative externality. 24. Positive externalities exist when A) Social costs exceed private costs. B) Production creates private benefits. C) Private benefits are greater than private costs. D) Private benefits are less than social benefits. Show Answer Correct Answer: D) Private benefits are less than social benefits. 25. Asymmetric information in a market transaction occurs when there is unequal knowledge possessed by the A) Buyer and the government. B) Seller and the government. C) Taxpayer and the government. D) Buyer and the seller. Show Answer Correct Answer: D) Buyer and the seller. 26. Windows 10 is an example of a A) Technological Monopoly. B) Geographic Monopoly. C) Natural Monopoly. D) Government Monopoly. Show Answer Correct Answer: A) Technological Monopoly. 27. What can cause the supply curve for a product to shift to the right? A) An increase in demand for the product. B) An increase in government subsidies to producers. C) An increase in indirect taxes on the product. D) An increase in the costs of production. Show Answer Correct Answer: B) An increase in government subsidies to producers. 28. What are Externalities? A) The uncompensated impact of one person's actions on the well-being of a bystander. B) An uncompensated cost that an individual or firm imposes on others. C) A benefit that an individual or firm confers on others without receiving compensation. D) None of above. Show Answer Correct Answer: A) The uncompensated impact of one person's actions on the well-being of a bystander. 29. Police protection is an example of a ..... good and apples are an example of a ..... good. A) Public; Private. B) Private; Public. C) Private; Private. D) Public; Public. Show Answer Correct Answer: A) Public; Private. 30. In which of the following situations is market failure least likely to occur? A situation where; A) Externalities exist. B) Many producers compete in the market. C) There is a sole producer in market. D) There is a very uneven distribution of income and wealth. Show Answer Correct Answer: B) Many producers compete in the market. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 2Market Failures Quiz 3Market Failures Quiz 4Market Failures Quiz 6Market Failures Quiz 7Market Failures Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books