Question 1

Refer to the above supply and demand graph.Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective.This supply and demand graph indicates that there is (are) :

Accepted Answer

A)   spillover benefits to the production of this product.
B)   spillover costs to the production of this product.
C)   an overallocation of resources to the production of this product.
D)   a negative externality from the production of this product.E) B) and C)
F) None of the above

Question 2

A public good:

Accepted Answer

A)   generally results in substantial spillover costs.
B)   can never be provided by a nongovernmental organization.
C)   cannot be provided to one person without making it available to others too.
D)   costs essentially nothing to produce and thus is provided by the government at zero price.E) B) and C)
F) B) and D)

Question 3

2: A)  efficiency is achieved. B)  an efficiency loss (or deadweight loss) of a + b + c + d occurs. C)  an efficiency loss (or deadweight loss) of a + c occurs. D)  an efficiency loss (or deadweight loss) of e + f occurs." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If actual production and consumption occur at Q2:

Accepted Answer

A)   efficiency is achieved.
B)   an efficiency loss (or deadweight loss) of a + b + c + d occurs.
C)   an efficiency loss (or deadweight loss) of a + c occurs.
D)   an efficiency loss (or deadweight loss) of e + f occurs.E) All of the above
F) A) and D)

Question 4

Once a government has provided a public good,everyone:

Accepted Answer

A)   pays the cost.
B)   can obtain the benefit.
C)   experiences positive externalities.
D)   experiences negative externalities.E) C) and D)
F) B) and D)

Question 5

Market failure occurs when not every consumer who wants a good can obtain it.

Accepted Answer

A) True 
 B)False

Exam 5: Market Failures: Public Goods and Externalities

Once a government has provided a public good,everyone:

Correct Answer
verified

Market failure occurs when not every consumer who wants a good can obtain it.

Correct Answer
verified

A public good:

Correct Answer
verified

Refer to the above diagram.If actual production and consumption occur at Q₂:

Correct Answer
verified

Refer to the above supply and demand graph.Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective.This supply and demand graph indicates that there is (are) :

Correct Answer
verified

Exam 5: Market Failures: Public Goods and Externalities

Once a government has provided a public good,everyone:

Correct AnswerverifiedShow Answer

Market failure occurs when not every consumer who wants a good can obtain it.

Correct AnswerverifiedShow Answer

A public good:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If actual production and consumption occur at Q2:

Correct AnswerverifiedShow Answer

Refer to the above supply and demand graph.Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective.This supply and demand graph indicates that there is (are) :

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the above diagram.If actual production and consumption occur at Q₂:

Correct Answer
verified

Correct Answer
verified