Exam 5: Public Spending and Public Choice

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

The provision of a legal system is an important economic function of the government because

An important characteristic of private goods is

Suppose a valley periodically floods. A dam can be built in the river that would prevent the flooding. Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

Public goods are unlikely to be provided by the private sector because

The goal of Medicare is to

Which of the following often involves positive external benefits?

Market failures

A difference between the market and the public sector is that

Social Security and Medicare are clear examples of

Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of

An example of a market failure is

In its most ideal form, a price system allows

A government agency charged with enforcing antitrust laws is

What is market failure? How can the government correct market failure?

Education in the United States is

Which of the following leads to an underallocation of resources to a specific economic activity?

When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's

When the production of one good spills benefits over to third parties, the government should consider all of the following EXCEPT