Exam 5: Difficult Cases for the Market, and the Role of Government

Which of the following is a valid reason for government provision rather than market provision of certain economic goods and services?

Externalities are fundamentally the result of

When a firm generates external benefits, a more efficient outcome would result if

Which of the following provides the best example of a public good?

When consumers cannot tell the difference at the time of sale between high-quality products and those with defects, strong sales of the low-quality products will tend to depress price and drive the high-quality products from the market. Economists call this

Market failure will most likely arise from poor information when the product is

Suppose that an MBA degree creates no externality because the benefits of an MBA are captured by the student in the form of higher wages. If the government offers subsidies for MBAs, then which of the following statements is correct?

Because the benefits derived from an activity decline as it is expanded, it is generally wise to

If the construction of a new elementary school would create $5 million worth of benefits for citizens and cost $7 million to construct, then using the criterion of economic efficiency, the school

Economic efficiency indicates that