#1
Which of the following is NOT a characteristic of a public good?
Rivalry in consumption
ExplanationPublic goods are non-excludable and non-rivalrous.
#2
Which of the following is an example of a common market failure?
Negative externalities
ExplanationCommon market failure: when market allocation leads to inefficiency.
#3
Which of the following is a characteristic of a private good?
Excludability
ExplanationPrivate goods: exclusive to paying customers.
#4
What is the economic term for the situation where the consumption of one person's goods or services affects the well-being of others in society?
Externality
ExplanationExternality: spillover effects from economic activities.
#5
Which of the following is an example of a negative externality?
A factory emitting pollution into a nearby river
ExplanationNegative externality: harm imposed on third parties not involved in the transaction.
#6
What is a common intervention method used by governments to correct market failures caused by positive externalities?
Subsidies
ExplanationPositive externalities: benefits received by third parties. Subsidies incentivize production/consumption.
#7
Which of the following is an example of a common property resource?
A public park
ExplanationCommon property resources: rivalrous and non-excludable resources.
#8
Which of the following is NOT a reason for market failure?
Perfect competition
ExplanationPerfect competition leads to optimal resource allocation.
#9
What is the primary goal of antitrust laws?
To promote competition and prevent monopolistic behavior
ExplanationAntitrust laws aim to ensure fair competition and prevent monopolies.
#10
Which of the following is an example of a merit good?
Education
ExplanationMerit goods: benefits to society exceed private benefits.
#11
In the context of market failures, what does 'information asymmetry' refer to?
When sellers have more information than buyers
ExplanationInformation asymmetry: one party has more/better information than the other.
#12
What is the Tragedy of the Commons?
A theory explaining how individuals acting in their own self-interest can deplete shared resources
ExplanationTragedy of the Commons: self-interested individuals deplete common resources.