Exam 8: Market Failure Versus Government Failure

Public television periodically runs pledge drives to raise money. Only a small percentage of the people who benefit from public television are willing to pay. What do economists call the people who do not pay?

Refer to the graph shown. If the marginal cost external to the trade associated with the use of gasoline is $0.10 per gallon, the point on the graph corresponding to the efficient quantity and price is:

The existence of negative externalities:

A policy is considered optimal if it:

A good that if supplied to one person is supplied to all and whose consumption by one individual does not prevent its consumption by another individual is known as:

Which of the following is an example of screening?

With regard to a public good provided by the government:

Based on economic theory, most economists believe market incentive plans are:

Refer to the graph shown, which shows the demand and supply for a new vaccine against the common cold. Suppose once vaccinated, a person cannot catch a cold or give a cold to someone else. At the competitively determined output level, the marginal social benefit will be:

Which of the following is not an example of an externality?

An efficient policy to reduce pollution would reduce pollution to the point where:

Which policy is likely to be the most efficient in dealing with automobile emission pollution?

If the marginal benefit of one more unit of a public good is $500 for Sam and $800 for Alex, the social benefit of one more unit of a public good is:

Refer to the graph shown. The free market equilibrium in the graph is at a price and quantity of:

A strategy that achieves a goal at the lowest cost in total resources without consideration of who pays those costs is:

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. The socially efficient level of output is:

Economists generally call the effect of an agreement on others that is not taken into account by the parties making the agreement:

When you purchase and eat a hamburger, no one else can eat the same hamburger. When you download a file on the Internet, the file is still available for others to download. Economists explain this difference between hamburgers and computer files by saying that the hamburger is:

Adverse selection problems can occur when buyers and sellers have different amounts of information about a good for sale.

Which of the following methods of reducing the amount of trash society generates is most likely to be efficient?