Market Failures Quiz 11 (15 MCQs)

Quiz Instructions

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1. Attempting to distinguish a good or service from other firms is called what?

Correct Answer: D) Product Differentiation.

2. Market failure arises when

Correct Answer: B) No account is taken of positive externalities in consumption.

3. Which one of the following is most likely to be an example of the immobility of a factor of production? Workers' unwillingness to

Correct Answer: A) Change jobs.

4. Which one of the following is most likely to reduce market failure?

Correct Answer: D) Improving the information available to consumers.

5. Market responses to asymmetric information

Correct Answer: C) Both a and b.

6. Things that are for our collective well-being are funded by our .....

Correct Answer: A) Government.

7. Public goods include

Correct Answer: D) Fire and police services.

8. Occurs when the production of a good does not take place at the socially efficient level of output (allocative efficiency where MSC = MSB).

Correct Answer: A) Market Failure.

9. Government regulations exist to

Correct Answer: B) Protect consumers from negative externalities.

10. The most competitive market structure is

Correct Answer: C) Perfect competition.

11. Which of the following are reasons for markets to be incomplete?

Correct Answer: C) Both of them.

12. What could cause the demand for a product to become more price-elastic?

Correct Answer: B) More substitutes coming onto the market.

13. Selling your old computer on Ebay could be an example of

Correct Answer: B) Asymmetric information.

14. Which of the following conditions lead to emergence of natural monopoly?

Correct Answer: B) High fixed cost.

15. A situation of market failure is said to exist if;

Correct Answer: D) Third parties in society are affected and not compensated.