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

Which of the following most clearly indicates why the franchiser of a product has a strong incentive to monitor the quality of the product among all of the franchised sellers?

When market failure is present,

Suppose external benefits are present in a market which results in the actual market price of $62 and market output of 3,000 units.How does this outcome compare to the efficient,ideal equilibrium?

It is difficult for the market process to provide public goods because

Suppose external benefits are present in a market which results in the actual market price of $34 and market output of 126 units.How does this outcome compare to the efficient,ideal equilibrium?

A good is considered nonexcludable if

If it is impossible or very costly to exclude nonpaying customers from receiving a good,the good is considered to be

Markets fail when externalities are present

Many external costs occur because

Markets fail to allocate resources efficiently when

The spillover effects of actions that affect the well-being of nonconsenting third parties are called

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

A good is considered nonrival-in-consumption if

National defense is considered a public good because there appears to be no limits to the nonrivalry-in-consumption characteristic,and exclusion of nonpayers is impossible.Are there any other goods that so perfectly meet both public goods criteria?

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

Relative to a competitive situation,if a market lacks competition,economic theory suggests that

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

Suppose external costs are present in a market which results in the actual market price of $84 and market output of 320 units.How does this outcome compare to the efficient,ideal equilibrium?

Suppose external costs are present in a market which results in the actual market price of $50 and market output of 800 units.How does this outcome compare to the efficient,ideal equilibrium?

The absence of well-defined and enforceable private property rights often