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

Sam lives next to The Party Pub and its outdoor "beer garden" that features live music.An economics major,Sam considers this a positive externality.Dave,another economics student,lives next to The Party Pub too,but he considers the music a negative externality.Which student,if either,is correct? Why?

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

In which of the following markets are information problems likely to be most serious?

In which of the following markets are information problems likely to be most serious?

A free-rider problem exists when a good that has the following characteristic?

"Government failure" exists when political decision-makers choose actions that

Compared to ideal economic efficiency,when the production of a good generates external costs,competitive markets will likely result in an output that is too

The government sometimes provides public goods because

When the free-rider problem exists,

Which of the following are the four major factors that may undermine the ability of the invisible hand to produce market efficiency?

Markets may have difficulty providing the proper quantity of a public good because

Externalities cause the market mechanism to allocate goods and resources inefficiently because

Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $25 and market output of 1,000 units.How does this outcome compare to the efficient,ideal equilibrium?

Externalities

From the standpoint of economic efficiency,markets tend to provide

The government sometimes provides public goods because

Which of the following best explains why making automobiles completely safe is not efficient?

What are the two distinguishing characteristics of a public good?

Anne has just purchased a new house in a lovely neighborhood.Her neighbors are friendly and even brought her house-warming gifts.Anne,however,has a problem.Her neighbors have cats,and Anne hates cats.Even though the city has a law requiring all outdoor pets to be on a leash,her neighbors ignore it,and the cats roam all over Anne's property.How would an economist describe this situation? Is there anything Anne can do?

Which of the following is true of public goods?