#1
What is a market failure?
When the government intervenes too much in the market
When the market is perfectly efficient
When the market fails to allocate resources efficiently
When there is no competition in the market
#2
Which economic concept is associated with the idea that individuals pursue their own self-interest, leading to overall economic benefits?
Altruism
Individualism
Rational self-interest
Communism
#3
Which economic concept suggests that individuals make decisions based on comparing the marginal benefits and marginal costs?
Opportunity cost
Sunk cost
Marginal analysis
Utility maximization
#4
Which of the following is an example of a positive externality?
Air pollution from factories
Education benefits spilling over to the community
Traffic congestion in a city
Water pollution from industrial waste
#5
What is the Coase Theorem primarily concerned with?
Government intervention in markets
The tragedy of the commons
Negotiation and private solutions to externalities
Market equilibrium
#6
What is the concept of moral hazard in the context of market failures?
When individuals take on excessive risks because they know they will be bailed out
The tendency of consumers to act ethically in the market
The government's intervention in ensuring fair market practices
The equal distribution of resources in the market
#7
In the context of externalities, what is a common solution to address negative externalities?
Subsidizing the production of goods with negative externalities
Taxing the production of goods with negative externalities
Banning the production of goods with negative externalities
Promoting the production of goods with negative externalities
#8
Which market structure is most likely to lead to monopolistic behavior and externalities?
Perfect competition
Monopoly
Oligopoly
Monopolistic competition
#9
What is the concept of a Pigovian tax or subsidy used for in the context of externalities?
To promote consumption of goods with negative externalities
To discourage production of goods with negative externalities
To encourage production of goods with positive externalities
To ensure equal distribution of resources in the market
#10
How does a public good differ from a private good?
Public goods are always provided by the government
Public goods are non-excludable and non-rivalrous
Private goods are always free of charge
Private goods are only consumed by the wealthy
#11
What is the tragedy of the commons?
The depletion of shared resources due to individual self-interest
The success of common resource management
The government's role in managing common resources
The efficient allocation of resources in a common pool
#12
What is the free rider problem in public goods?
Individuals benefit from public goods without paying for them
The government provides public goods free of charge
Public goods are only accessible to those who contribute the most
The unequal distribution of public goods in society
#13
How does asymmetric information contribute to market failures?
It ensures a fair and transparent exchange of information in the market
It leads to informed decision-making by all market participants
It results in one party having more information than the other, causing inefficiencies
It eliminates information gaps in the market
#14
What is the tragedy of the anticommons?
The efficient allocation of resources in a common pool
The overuse of shared resources due to individual self-interest
The underuse of resources due to excessive regulation
The depletion of resources due to equal distribution
#15
In the context of market failures, what is the concept of information asymmetry?
All market participants have the same level of information
Some individuals possess more information than others, leading to inefficiencies
Government regulates and controls all information in the market
Information is equally distributed among all market participants