Exam 4: Markets in Action

Which of the following is a public good?

If a good gives rise to substantial external benefits to society that are associated with its production and/or consumption then the good likely has too few resources devoted to its production.

In order to avoid the free-rider problem, which of the following goods is best provided by the government and paid for with tax dollars?

Denise is thinking about setting up a butterfly garden in her backyard. She estimates that it will cost her $2,000 to purchase and install special plants and an irrigation system to attract butterflies. The benefit she expects to receive is $1,800. In addition, neighbor Billy will receive a benefit of $150 and neighbor Sammy will receive a benefit of $100. From this, we can conclude that:

If the equilibrium price of good X is $4 and a price ceiling is imposed at $5, the result will be a(n):

If the equilibrium price of bread is $2 and the government imposes a $1.50 price ceiling on the price of bread, then:

An externality is an unintended ____ imposed on ____ as a result of the ____.

If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?

If there is a decrease in demand for lettuce, we would expect:

The city of Logan Square needs $40 million for a network of streetlights. There are 20,000 residents in the Logan Square neighborhood, meaning the cost for each resident is $2,000. Psychiatrist Denise Miller refuses to donate $2,000 towards the project. This is an example of the problems encountered with:

Market failure can result from market outcomes that:

What are market failures? Discuss examples of market failures. What can government do to improve the results of market failures?

Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:

Suppose that X and Y are substitutes. If the price of Y increases, equilibrium price and quantity for X both rise.

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Bobby's neighbor is growing a tree that is blocking Bobby's ocean view. Bobby is considering taking his neighbor to court. This is most likely an example of a:

Suppose a price ceiling is set by the government below the market equilibrium price. Which of the following will result?

A vaccination shot provides a(n):

Exhibit 4-9  Data on supply and demand In Exhibit 4-9, if a price ceiling is set at $1.50 the market result after adjustment is:

If the supply curve decreases while the demand curve remains unchanged, the equilibrium price would decrease.