This quiz works best with JavaScript enabled. Home > Microeconomics > Failures > Market Failures – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A student graduates from college and starts a profitable new business. She creates jobs for three workers. Those jobs are A) A form of nonprice competition. B) A negative externality. C) A positive externality of her education. D) A sign of market efficiency. Show Answer Correct Answer: C) A positive externality of her education. 2. An economy has achieved productive efficiency if: A) It is self-sufficient in all products. B) It has eliminated all negative externalities. C) Cost equals price in all its industries. D) It is unable to produce more of one good without producing less of another. Show Answer Correct Answer: D) It is unable to produce more of one good without producing less of another. 3. The most extreme version of imperfect competition is A) Monopolistic competition. B) Perfect competition. C) Monopoly. D) Oligopoly. Show Answer Correct Answer: C) Monopoly. 4. How can the government intervene in markets? A) Regulator. B) Consumer. C) Producer. D) All of the above. Show Answer Correct Answer: D) All of the above. 5. Why are externalities a sign of a market failure? A) The economy doesn't want too much of a good thing. B) Cost/benefits of goods/services aren't allocated only to those who produce or consume the product. C) Eternalities only exist in monopolies, which is a sign of a market failure. D) None of above. Show Answer Correct Answer: B) Cost/benefits of goods/services aren't allocated only to those who produce or consume the product. 6. Specific tax refers to a A) Tax per unit. B) Tax as % of the price. C) Tax on income/profits. D) Tax on expenditure of a good. Show Answer Correct Answer: A) Tax per unit. 7. Free rider problem occurs because of ..... A) Government failure. B) Non-rivalry. C) Non-excludability. D) External costs. Show Answer Correct Answer: C) Non-excludability. 8. Benefits to society from consuming one more unit of a good A) Marginal Private Benefits. B) Marginal Social Benefits. C) Negative Externality of Production. D) Tradable Permits/Cap and Trade Schemes. Show Answer Correct Answer: B) Marginal Social Benefits. 9. What is an example of market failure? A) Prices charged to cover social cost. B) A monopoly making abnormal profit. C) The closure of small, independent shops in a rural area. D) The inability of a car producer to achieve economies of scale. Show Answer Correct Answer: B) A monopoly making abnormal profit. 10. Tom bought a pizza and ate it. No one else can benefit from the pizza now:-( . This quality is an example of A) Excludability. B) Non-excludability. C) Rivalry. D) Non-rivalry. Show Answer Correct Answer: C) Rivalry. 11. Which of the effects of economic development would be classed as an external cost? A) Higher wages. B) Increased pollution. C) Increased production. D) More advanced technology. Show Answer Correct Answer: B) Increased pollution. 12. Products people underestimate the benefits of consuming and producing A) Merit goods. B) Demerit goods. C) Public goods. D) Economic goods. Show Answer Correct Answer: A) Merit goods. 13. Market forces of supply and demand decide what is provided for society in which type of economy? A) Command. B) Mixed. C) Market. D) None of above. Show Answer Correct Answer: C) Market. 14. Ad Valorem tax refers to A) Tax per unit. B) Tax that changes with the price of the good. C) Tax on profits. D) Tax on income. Show Answer Correct Answer: B) Tax that changes with the price of the good. 15. Economists define market structure according to four main characteristics:number of producers, similarity of products, ease of entry, and A) Brand loyalty. B) Control over prices. C) Monopolistic competition. D) Perfect competition. Show Answer Correct Answer: B) Control over prices. 16. Nonprice competition typically focuses on four factors:physical characteristics, service, status and image, and A) Barriers to entry. B) Location. C) Price. D) Collusion. Show Answer Correct Answer: B) Location. 17. Private businesses cannot always provide goods and services A) Profitably. B) Fairly. C) Safely. D) All of the above. Show Answer Correct Answer: D) All of the above. 18. What market structure would agricultural products fall into? A) Perfect (pure) competition. B) Monopolistic competition. C) Oligopoly. D) Monopoly. Show Answer Correct Answer: A) Perfect (pure) competition. 19. Which of the following teams will win the world cup? A) England. B) Spain. C) Wales. D) Brazil. Show Answer Correct Answer: A) England. 20. Which of the following is not a characteristic of a competitive market? A) Lots of non price competition. B) Products are very similar so there must be product differentiation. C) Identical products. D) Very competitive. Show Answer Correct Answer: C) Identical products. ← PreviousNext →Related QuizzesMicroeconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 2Market Failures Quiz 4Market Failures Quiz 5Market Failures Quiz 6Market Failures Quiz 7Market Failures Quiz 8Market Failures Quiz 9Market Failures Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books