This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Failures > Market Failures – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A market is defined as being in equilibrium when A) There is maximum output at minimum cost. B) Prices are at their lowest possible level. C) There is no tendency for the market price to change. D) Consumer satisfaction is maximised. Show Answer Correct Answer: C) There is no tendency for the market price to change. 2. A firm in a perfectly competitive labor market will stop employing labor when ..... A) Value of the marginal product of labor = wage rate. B) Value of the marginal product of labor = marginal revenue. C) MR= MC. D) Total cost = total revenue. Show Answer Correct Answer: A) Value of the marginal product of labor = wage rate. 3. Which market structure has a large number of buyers and sellers (the most) and products are identical? A) Perfect (pure) competition. B) Monopoly. C) Monopolistic competition. D) Oligopoly. Show Answer Correct Answer: A) Perfect (pure) competition. 4. If it becomes easier for a market to see a new business enter it, that market will eventually A) See increased transaction costs. B) See a lowering of overall consumers. C) See more governmental regulation. D) See more competition. Show Answer Correct Answer: D) See more competition. 5. Which of the following is an example of companies in monopolistic competition? A) Netflix, Hulu, Amazon Prime. B) AT&T, Universal Studios, Kellogg's. C) Nike, Regal Cinemas, Toyota. D) Coca-Cola, Adidas, General Electric. Show Answer Correct Answer: A) Netflix, Hulu, Amazon Prime. 6. The following is a headline from the newspaper. Car drivers to pay higher taxesWhat will result from an increased tax on cars? A) Reduced number of bus journeys. B) Increased petrol (gas) sales. C) Reduced external costs of car use. D) Increased employment in the car industry. Show Answer Correct Answer: C) Reduced external costs of car use. 7. The following statements are true of government regulations except A) They exist to protect consumers. B) They are always popular with private businesses. C) They limit economic freedom. D) They seek to limit negative externalities. Show Answer Correct Answer: B) They are always popular with private businesses. 8. Which type of laws promote competition by preventing or breaking up monopolies? A) Labor laws. B) Laws protecting the environment. C) Antitrust laws. D) Constitutional law. Show Answer Correct Answer: C) Antitrust laws. 9. An inferior good always has: A) Positive price elasticity of demand. B) Many substitutes. C) Negative cross elasticity of demand. D) Negative income elasticity of demand. Show Answer Correct Answer: D) Negative income elasticity of demand. 10. Which action by the operators of an airport directly reduces external costs? A) The abolition of night flights. B) The building of a new runway. C) The payment of a productivity bonus. D) The reduction of charges for landing aircraft. Show Answer Correct Answer: A) The abolition of night flights. 11. What is an External Benefit? 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: C) A benefit that an individual or firm confers on others without receiving compensation. 12. In a city, what is most unlikely to be provided by the private market system? A) Street lights. B) A school. C) A museum. D) A sports field. Show Answer Correct Answer: A) Street lights. 13. Utility companies such as electricity would be an example of which type of monopoly? A) Geographic monopoly. B) Natural monopoly. C) Pure monopoly. D) Technological monopoly. Show Answer Correct Answer: B) Natural monopoly. 14. Which of the categories below can junk food be classified as? A) Public good. B) Private good. C) Merit Good. D) Demerit good. Show Answer Correct Answer: D) Demerit good. 15. A situation where the market does not allocate resources very efficiently is called what? A) Market Failure. B) Market Adjustment. C) Market Allocation. D) Market Eccificient. Show Answer Correct Answer: A) Market Failure. 16. Which of the following is not an impact of taxation? A) Government revenue. B) Higher prices. C) Falling quantity demanded. D) Lower prices. Show Answer Correct Answer: D) Lower prices. 17. Attempting to distinguish a good or service from other firms is called what? A) Product Assimilation. B) Product Allocation. C) Product Viability. D) Product Differentiation. Show Answer Correct Answer: D) Product Differentiation. 18. Market failure arises when A) Prices rise in response to excess demand. B) No account is taken of positive externalities in consumption. C) Firms are unprofitable and go out of business. D) Costs increase as firms expand their production. Show Answer Correct Answer: B) No account is taken of positive externalities in consumption. 19. Which one of the following is most likely to be an example of the immobility of a factor of production? Workers' unwillingness to A) Accept lower wages. B) Improve productivity. C) Change jobs. D) Attend training courses. Show Answer Correct Answer: C) Change jobs. 20. Which one of the following is most likely to reduce market failure? A) Improving the information available to consumers. B) The existence of merit goods. C) Increased economies of scale in production. D) A decrease in the mobility of labour. Show Answer Correct Answer: A) Improving the information available to consumers. 21. Market responses to asymmetric information A) Signaling. B) Screening. C) Both a and b. D) None of above. Show Answer Correct Answer: C) Both a and b. 22. Things that are for our collective well-being are funded by our ..... A) Emus. B) Government. C) Selves. D) Free markets. Show Answer Correct Answer: B) Government. 23. Public goods include A) Banking and other financial services. B) Child-care services. C) Computer repair services. D) Fire and police services. Show Answer Correct Answer: D) Fire and police services. 24. Occurs when the production of a good does not take place at the socially efficient level of output (allocative efficiency where MSC = MSB). A) Marginal Social Costs. B) Marginal Private Costs. C) Externality. D) Market Failure. Show Answer Correct Answer: D) Market Failure. 25. Government regulations exist to A) Increase economic freedom. B) Protect consumers from negative externalities. C) Punish people who intervene in the free market. D) Provide incentives to privatize. Show Answer Correct Answer: B) Protect consumers from negative externalities. 26. The most competitive market structure is A) Monopolistic competition. B) Monopoly. C) Oligopoly. D) Perfect competition. Show Answer Correct Answer: D) Perfect competition. 27. Which of the following are reasons for markets to be incomplete? A) Undersupply of Innovation. B) Presence of Asymmetric information. C) Both of them. D) None of them. Show Answer Correct Answer: C) Both of them. 28. What could cause the demand for a product to become more price-elastic? A) A smaller proportion of income being spent on the product. B) More substitutes coming onto the market. C) The product becoming more of a necessity. D) The product falling in price. Show Answer Correct Answer: B) More substitutes coming onto the market. 29. Selling your old computer on Ebay could be an example of A) Asymmetric information. B) Public goods. C) Tragedy of the Commons. D) Negative externalities. Show Answer Correct Answer: A) Asymmetric information. 30. Which of the following conditions lead to emergence of natural monopoly? A) High fixed cost. B) Low variable cost. C) High variable cost. D) Low fixed cost. Show Answer Correct Answer: A) High fixed cost. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 2Market Failures Quiz 3Market Failures Quiz 4Market Failures Quiz 5Market Failures Quiz 6Market Failures Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books