Question 1

The key explanation for the prevalence of waterway pollution is

Accepted Answer

A) the inclusion in production of all costs involving use of the waterway. 
B) that there are private costs but no costs to society. 
C) that waterways are often an open access,commonly owned resource. 
D) that waterways are subject to the market's normal control procedures. 
A) the inclusion in production of all costs involving use of the waterway. 
B) that there are private costs but no costs to society. 
C) that waterways are often an open access,commonly owned resource. 
D) that waterways are subject to the market's normal control procedures.

Question 2

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

Accepted Answer

A) a repeat-purchase item. 
B) easily evaluated on inspection. 
C) often purchased from the same seller. 
D) unlikely to be purchased from the same seller in the future. 
A) a repeat-purchase item. 
B) easily evaluated on inspection. 
C) often purchased from the same seller. 
D) unlikely to be purchased from the same seller in the future.

Question 3

Government provision of goods and services that cannot easily be provided through markets because it is difficult to establish a one-to-one link between payment and consumption of the good is referred to as the

Accepted Answer

A) productive function of government. 
B) protective function of government. 
C) construction function of government. 
D) income redistribution function of government. 
A) productive function of government. 
B) protective function of government. 
C) construction function of government. 
D) income redistribution function of government.

Question 4

Sellers will tend to be most concerned with customer satisfaction when

Accepted Answer

A) it is difficult for the customer to evaluate product quality. 
B) they depend on repeat customers for most of their business. 
C) they sell primarily to tourists. 
D) they are a monopoly protected from competition by government licensing. 
A) it is difficult for the customer to evaluate product quality. 
B) they depend on repeat customers for most of their business. 
C) they sell primarily to tourists. 
D) they are a monopoly protected from competition by government licensing.

Question 5

Figure 5-1
  
-In Figure 5-1,S₁ and D illustrate the demand and supply for a product if it were produced in a normal competitive market.Which of the following would be true if the firms in the industry were instead able to get government licensing restrictions to limit competition in the market?

Accepted Answer

A) The restricted market supply would be S₃,resulting in a lower price and a higher than efficient level of output. 
B) The restricted market supply would be S₃,resulting in a higher price and a less than efficient level of output. 
C) The restricted market supply would be S₂,resulting in a lower price and a higher than efficient level of output. 
D) The restricted market supply would be S₂,resulting in a higher price and a less than efficient level of output. 
A) The restricted market supply would be S₃,resulting in a lower price and a higher than efficient level of output. 
B) The restricted market supply would be S₃,resulting in a higher price and a less than efficient level of output. 
C) The restricted market supply would be S₂,resulting in a lower price and a higher than efficient level of output. 
D) The restricted market supply would be S₂,resulting in a higher price and a less than efficient level of output.

Question 6

When externalities are present,

Accepted Answer

A) suppliers will refuse to produce desired goods and services. 
B) this indicates that property rights are well-defined and enforced. 
C) competitive market outcomes may be inconsistent with ideal economic efficiency. 
D) competitive markets will generally achieve ideal economic efficiency. 
A) suppliers will refuse to produce desired goods and services. 
B) this indicates that property rights are well-defined and enforced. 
C) competitive market outcomes may be inconsistent with ideal economic efficiency. 
D) competitive markets will generally achieve ideal economic efficiency.

Question 7

Brand names such as "Nabisco" or "Sony"

Accepted Answer

A) raise the cost of goods because they require advertising to make consumers aware of the brand name and,therefore,generally increase the price of products to consumers without producing any benefit to them. 
B) generally convey little information about a product to consumers. 
C) benefit consumers by assuring them of a known quality level when they buy a product that they have little previous first-hand knowledge about. 
D) provide the most value to consumers for goods that are repeat-purchase items. 
A) raise the cost of goods because they require advertising to make consumers aware of the brand name and,therefore,generally increase the price of products to consumers without producing any benefit to them. 
B) generally convey little information about a product to consumers. 
C) benefit consumers by assuring them of a known quality level when they buy a product that they have little previous first-hand knowledge about. 
D) provide the most value to consumers for goods that are repeat-purchase items.

Question 8

"Government failure" is present when

Accepted Answer

A) constitutional restrictions block government action that is favored by the majority of voters. 
B) political decision-makers try to serve the general public rather than their personal interest. 
C) the structure of incentives encourages political decision-makers to undertake actions that conflict with the efficient allocation of resources. 
D) the political decision-makers are motivated by something other than good intentions;if they have good intentions,political action will allocate resources efficiently. 
A) constitutional restrictions block government action that is favored by the majority of voters. 
B) political decision-makers try to serve the general public rather than their personal interest. 
C) the structure of incentives encourages political decision-makers to undertake actions that conflict with the efficient allocation of resources. 
D) the political decision-makers are motivated by something other than good intentions;if they have good intentions,political action will allocate resources efficiently.

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

The key explanation for the prevalence of waterway pollution is

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

Government provision of goods and services that cannot easily be provided through markets because it is difficult to establish a one-to-one link between payment and consumption of the good is referred to as the

Sellers will tend to be most concerned with customer satisfaction when

Figure 5-1 -In Figure 5-1,S₁ and D illustrate the demand and supply for a product if it were produced in a normal competitive market.Which of the following would be true if the firms in the industry were instead able to get government licensing restrictions to limit competition in the market?

When externalities are present,

Brand names such as "Nabisco" or "Sony"

"Government failure" is present when

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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