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

Suppose the actions of the producers of a good generate an external benefit which results in the actual market price of $15 and market output of 614 units. How does this outcome compare to the efficient, ideal equilibrium?

Markets fail when externalities are present

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

The government sometimes provides public goods because

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

Figure 5-4 -Refer to Figure 5-4. The inefficient equilibrium price and quantity are

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

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?

Which of the following is a valid reason for government provision rather than market provision of certain economic goods and services?

Markets fail to allocate resources efficiently when

A college has found that during every home football game, a group of students sits on a hillside next to the stadium and watches the game without purchasing tickets. In economics, the problem that this college is facing is referred to as a

Sparkle-Bright toothpaste is a new product that advertises it will give you fresh breath and shiny, white teeth. You buy a tube for $1.99, and after brushing, you have both bad breath and dull teeth. Is there a role for the public sector in this situation?

Sellers will tend to be most concerned with customer satisfaction when

In a market that lacks sufficient competition,

The "free rider problem" occurs in connection with

An item purchased often by the same buyer is known as a

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 the government offers subsidies for MBAs, then which of the following statements is correct?

Economic efficiency requires that

The government sometimes provides public goods because

General agreement exists that the legitimate economic functions of government include