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

Why is a stable monetary system essential for the smooth operation of a market system? What would an unstable monetary system be like? Why isn't a barter economy just as efficient as an economy with money?

The major distinction between private and public goods is that

In a competitive market,if the production process involves an external cost,such as pollution of the environment,the market will

When economists say that an activity meets the criterion for economic efficiency,they mean

If the construction of a new roadway would create $10 billion worth of benefits for citizens and would cost $8 billion to construct,then using the criterion of economic efficiency,the roadway

If in market equilibrium the true marginal cost of producing a good exceeds the marginal cost incurred by the firm,

Which of the following would be a protective function of government?

A hilly,public golf course is often used by sledders in the winter.One of the sledders was quoted as saying,"This is public property,so we have just as much a right to be on these hills as anyone else.Besides,when it snows,golfers can't use the course anyway.Sledding doesn't harm anything." Is he correct? Why or why not?

A car sells at different prices at different dealerships in a local market.If a consumer has imperfect information about the price of a car at each dealership,he should

If the construction of a new hospital would create $6 million worth of benefits for citizens and would cost $8 million to construct,then using the criterion of economic efficiency,the hospital

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 there are no government subsidies for MBAs,then which of the following statements is correct?

Markets provide the efficient amount of a good or service when

The "free rider problem" occurs in connection with

When external costs are present in a market,

Students in a class are assigned to groups to work on a project.A grade will be given for each project,and everyone in the group will receive that grade.For the members of a particular group,the grade is a

From the viewpoint of economic efficiency,when competitive forces in an industry are weak,market allocation will often lead to

Which of these activities will most likely result in an external benefit?

The economic way of thinking indicates that government action will

How does the text define economic efficiency? Is this an absolute or a relative definition? Would another type of definition be preferable? Why or why not?

Manny's Bar-n-Grill is next door to a franchised fast-food restaurant near a busy freeway exit.Essentially,the menus,food quality,atmosphere,and service are equal at the two restaurants.Nevertheless,the nationally franchised restaurant can attract more customers,even though its prices are higher.This situation