Exam 8: Market Failure Versus Government Failure

Refer to the graph shown, which shows the demand and supply for a new vaccine against the common cold. Once vaccinated, a person cannot catch a cold or give a cold to someone else. If government does not subsidize the production of this vaccine:

All of the following are considered sources of market failure except:

Which of the following is an argument an economist would use to argue against market regulation designed to protect consumers?

Milton Friedman argues that medical licensure benefits doctors because it:

Adverse selection is most likely to be a problem when:

Government failure is likely to occur for all of the following reasons except:

In 1990, the Clean Air Act was amended to place a national cap on sulfur dioxide emissions, giving electric utilities an allowance of a set amount of emissions and allowing the utilities to trade their allowances. This type of plan is:

Basic research is more likely to be funded by the federal than by state and local government because basic research:

If employers were made responsible for injuries suffered by employees while working at home:

Economists tend to believe that market incentive plans are generally more efficient than direct regulation.

Which of the following is the best example of an adverse selection problem?

Government provides secondary education because of its private good aspects.

If medical insurers could use information contained in DNA to predict the likelihood of major medical illnesses, the most likely outcome is that:

Opponents of government intervention argue that government makes decisions based on:

If air pollution control is a public good, it follows that:

Economists believe that if government provides information about product quality:

An individual with a highly elastic demand for gasoline will:

An externality is present in a free market whenever:

Which of the following is not a question raised by critics of medical licensure?

Government failure occurs when: