1 Jason and Jane are discussing the properties of markets. Jason argues that because markets are driven by voluntary actions, market outcomes always promote the overall social welfare. Jane argues that while markets may make many people better off, illegal markets have the same "self-healing" properties as legal markets and reduce overall social welfare. Who is correct?

A. Neither Jason nor Jane is correct.

B. Both Jason and Jane are correct.

C. Only Jane is correct.

D. Only Jason is correct

2Under _______ the government or some other regulatory body sets a cap for the total amount of emissions of a certain pollutant, such as SO2 or CO2.

A. Paternalism

B. cap-and-trade

C. Pigovian tax

D. regulation

3 Governments can provide infrastructure, information, and regulation to help lower the cost of

A. labor.

B. market transactions.

C. raw materials.

D. private property.