Exam 21: Market Failures, Government Failures, and Rent Seeking

Private property rights help to ensure an efficient use of resources, because owners of the resources must bear the costs of inefficient use.

The figure below shows the demand and supply curves in the market for elementary education. Figure 13.1 In the figure, D: Private demand curve for elementary education D + s: Demand curve which includes public benefits S: Supply curve of education Price and Quantity have been taken on vertical and horizontal axes respectively. In Figure 13.1, D represents the private demand for education, and D+s represents the demand including the public benefits of education.According to the figure, the optimal subsidy is equal to:

When the benefits of an activity are received by those who are not directly involved in it:

James insured his car with a renowned insurance company that checked his driving skills and verified his accident records before insuring his car.After paying two premiums for this insurance, James took to drinking and driving.This action of James is likely to create:

If education has positive externalities:

After John discovered he had a serious illness, he immediately purchased health insurance without disclosing his illness to the insurance company.This is an example of adverse selection.

Which of the following is not a problem with a public good?

The Austrian school of economists stressed on the efficiency of the markets on the pretext that:

Wikipedia and other projects utilizing wiki technology, represent an example of:

Production becomes more efficient if a common property is turned into a private property.

The figure given below shows the demand and supply curves of automobiles. Figure 13.3 In the figure, D: Demand curve of automobiles S: Supply of automobiles prior to the tax S+t: Supply of automobiles after the tax In Figure 13.3, the amount of tax levied by the government is equal to:

Both the principles of rivalry and mutual excludability apply for club goods.

Why does an existing less efficient technology drive out a new more efficient technology?

When a good is subsidized by the government, the amount of the good produced or consumed declines.

Which of the following is an example of the command approach to regulation?

Which of the following is true of a public good?

If the value of a network to a single user is $1 for each other user on the network, then a network of size 100 has a value of:

According to the Coase theorem, high transaction costs necessarily call for government action.

When resources are commonly owned, there are incentives in place to ensure that the resources are used efficiently.

Which of the following wouldhelp to minimize adverse selection?