This quiz works best with JavaScript enabled. Home > Microeconomics > Failures > Market Failures – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 1 (20 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) Legacy High School. B) Big Dry Creek Open Space. C) Target. D) Broomfield Water. Show Answer Correct Answer: C) 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) 0.1%. B) 0.4%. C) 1.4%. D) 2.4%. Show Answer Correct Answer: B) 0.4%. 5. Rival in consumption & not excludable A) Club Goods. B) Common Resources. C) Private Goods. D) Public Goods. Show Answer Correct Answer: B) 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) Common Access Resources. B) Sustainability. C) Asymmetric Information. D) Monopoly/Market Power. Show Answer Correct Answer: D) Monopoly/Market Power. 8. Products where social benefits to the community outweighs the private benefits to the consumer: A) Merit goods. B) Demerit goods. C) Public goods. D) Economic goods. Show Answer Correct Answer: A) Merit goods. 9. A congested road is an example of A) Public good. B) Common resource. C) Club goods. D) Private goods. Show Answer Correct Answer: B) Common resource. 10. Complete market failure always exists when A) There are negative externalities in production. B) The free market fails to provide sufficient merit goods. C) The free market underprices demerit goods. D) There is a missing market in the provision of public goods. Show Answer Correct Answer: D) There is a missing market in the provision of public goods. 11. Above-equilibrium wages paid by firms to increase worker productivity A) Efficiency Wages. B) Strike. C) Union. D) Utility. Show Answer Correct Answer: A) Efficiency Wages. 12. The federal government's role in providing aid to the poor and the aged is justified because of concerns about A) Market power. B) Macro failure. C) Inequity. D) Restricted supply. Show Answer Correct Answer: C) 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) Excluding those who want to freeride. C) Providing the good using taxation revenue. D) Depending on the private sector to supply it. Show Answer Correct Answer: C) Providing the good using taxation revenue. 15. Costs to producers of producing one more unit of a good A) Market Failure. B) Externality. C) Marginal Private Costs. D) Marginal Social Costs. Show Answer Correct Answer: C) 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) Regulatory cycle. B) Business cycle. C) Fiscal Policy. D) Monetary Policy. Show Answer Correct Answer: B) 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) Has an opportunity cost in production. B) Does not use up resources. C) Is supplied competitively. D) Makes a profit. Show Answer Correct Answer: A) Has an opportunity cost in production. 20. Is competition among restaurants in big cities a good example of monopolistic competition? A) Yes. B) No. C) Unsure. D) I think so?. Show Answer Correct Answer: A) Yes. 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