Exam 8: Market Failure Versus Government Failure

A person buying a used car could ask the seller for permission to take the car to a mechanic for an inspection. If the seller says no, the prospective buyer has gained information about the car. This process is known as:

A market for information is more likely to develop even in the absence of government regulation of information as long as the marginal:

If a negative externality is associated with burning firewood:

Suppose a public good that is worth $1 billion is not produced by the market, and so the government provides it, but at a cost of $3 billion. This attempt to correct a market failure has:

Proposals in Flint Hills, Kansas, to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce use of fossil fuel, but local chapters of the Nature Conservancy say they will befoul the landscape. The Nature Conservancy is arguing that that wind turbines:

Economists generally oppose direct regulation because:

When negative externalities are present, market failure often occurs because:

Apple products are able to play digital music that have a special encoding which makes pirating music more difficult. In economic terms, this encoding is an attempt to:

When positive externalities exist in the consumption of a good, the marginal social benefit:

How do economists explain the value firms and consumers place on brand names?

Economists generally prefer direct regulation to incentive-based programs because explicit regulation tends to be more efficient.

Economists tend to distrust voluntary approaches as a way to deal with externalities. What is their most common concern?

Music spreads easily and cheaply on computer networks. As a result, music has become more like:

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. This low percentage of people willing to contribute illustrates a difficulty with:

If a negative externality exists in the production of paper and paper is sold in a perfectly competitive market, at the equilibrium output:

If a program requires people to pay a price that reflects the cost of an externality associated with their actions that they previously did not pay, it will be in their best interest to change their behavior.

Refer to the graph shown. Say that there is a negative externality associated with the production of the good depicted. The marginal social cost from consuming this good at the competitive equilibrium output level is:

College education provides higher income for the individual but also a more productive and more educated person who will contribute to society in many ways. Higher education is an example of:

A system in which power plants buy and sell the right to pollute in the form of emission credits is known as:

If a positive externality is to be taken full advantage of, the: