Exam 5: Market Failure and Public Choice

If quality-detection costs are very low,

If a good that features a positive externality is produced in an unregulated free market, the good will be:

In the absence of government action, the private market would probably not provide as much police protection as is socially desirable because:

Which of the following describes an external benefit resulting from an individual's purchase of a winter flu shot?

The tendency of those who are insured to take more risks is a problem of:

Nonrivalry in consumption and the inability to exclude nonpaying consumers from using the goods are characteristics of what kinds of goods?

The free rider problem suggests that an individual will tend to:

Why might voters tend to be relatively uninformed about political issues?

Moving along an elastic portion of a demand curve, the change in price will always be proportionately less than the change in the quantity demanded.

A corrective tax equal to the external cost imposed on third parties levied on polluters will:

Figure 6-F -When positive externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable.

A family friend is shopping for an exclusive Vera Wang wedding gown for $8,000 but feels that the price is excessive.She argues that the company should lower prices not only to benefit customers but also to increase the company's revenues and profits.What has she assumed about the price elasticity of demand for these gowns? Is her assumption likely to be correct or incorrect? Why?

If James is willing to sell an extra concert ticket for $40 and actually sells it for $100, his consumer surplus is $60.

If unregulated, the market for cigarettes would produce a quantity that is too ____ at a price that is too ____ when compared to the socially optimal results.

The reason why national defense is commonly provided by the government, while food is not, is that food:

A perfectly inelastic supply curve is vertical.

If the world supply of diamonds decreases, diamonds become more valuable, and therefore, the consumer surplus derived from diamonds increases.

The median voter model predicts a strong tendency for both candidates to choose a position away from the middle of distribution.

Which of the following would be an example of a nongovernmental solution to a problem associated with externalities?

Figure 5-C -Refer to Figure 5-C.Market equilibrium and efficient equilibrium are denoted by points ____ respectively.