This quiz works best with JavaScript enabled. Home > Microeconomics > Failures > Market Failures – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 8 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Pigovian taxes A) Are used to correct negative externalities. B) Are used to correct positive externalities. C) Are primarily designed to fund public goods. D) Are a form of income tax. Show Answer Correct Answer: A) Are used to correct negative externalities. 2. ..... 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. 3. 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) Sustainability. C) Asymmetric Information. D) Monopoly/Market Power. Show Answer Correct Answer: C) Asymmetric Information. 4. What is an example of an external cost? A) The cost of industrial pollution. B) The cost of buying components from suppliers. C) The cost of bringing about a merger. D) A company's transport costs. Show Answer Correct Answer: A) The cost of industrial pollution. 5. 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. 6. 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. 7. Which one of the following is associated with a missing market? A) A monopoly restricting output. B) The production of a negative externality. C) A firm deciding to produce a private good. D) A government subsidising agricultural production. Show Answer Correct Answer: B) The production of a negative externality. 8. Positive externalities exist when A) Social costs exceed private costs. B) Private benefits are greater than private costs. C) Production creates private benefits. D) Private benefits are less than social benefits. Show Answer Correct Answer: D) Private benefits are less than social benefits. 9. 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. 10. Windows 10 is an example of a A) Government Monopoly. B) Natural Monopoly. C) Geographic Monopoly. D) Technological Monopoly. Show Answer Correct Answer: D) Technological Monopoly. 11. 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. 12. 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. 13. Police protection is an example of a ..... good and apples are an example of a ..... good. A) Public; Private. B) Private; Public. C) Public; Public. D) Private; Private. Show Answer Correct Answer: A) Public; Private. 14. 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. 15. Due to good weather, there is a surplus in the market for an agricultural product. Which change would cause the market to return to equilibrium? A) A decrease in demand. B) A fall in price. C) An increase in supply. D) A rise in price. Show Answer Correct Answer: A) A decrease in demand. 16. Costs to society 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: D) Marginal Social Costs. 17. There will be a case study on law in which you will be tasked with providing a couple written responses. The excerpts will provide you all the information needed. Good? A) Yes. B) No. C) Ummmm. D) Any other questions?. Show Answer Correct Answer: A) Yes. 18. Which of the following is a modern cartel? A) Coca-Cola, Pepsi, and Dr Pepper Snapple Group. B) Microsoft. C) Organization of Petroleum Exporting Countries. D) Standard Oil Company. Show Answer Correct Answer: C) Organization of Petroleum Exporting Countries. 19. What is the formula for social benefits? A) Social benefits = private costs + external benefits. B) Social costs = private costs + external costs. C) Social benefits = private benefits + external costs. D) Social benefits = private benefits + external benefits. Show Answer Correct Answer: D) Social benefits = private benefits + external benefits. 20. Which of the following is NOT a reason for market failure? A) Presence of Public Goods. B) Presence of Positive Externalities. C) Perfectly competitive markets. D) Incomplete markets. Show Answer Correct Answer: C) Perfectly competitive markets. ← PreviousNext →Related QuizzesMicroeconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 2Market Failures Quiz 3Market Failures Quiz 4Market Failures Quiz 5Market Failures Quiz 6Market Failures Quiz 7Market Failures Quiz 9Market Failures Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books