Chapter 9 WorksheetPart 1:

List 4 specific sources of microeconomic failure1) _____________________________________ 2) _____________________________________3) _____________________________________ 4) _____________________________________

Part 2: Fill in the blanks1) ____________ ____________ occurs when the market does not produce the optimal outcome.2) A(n) ____________ is a benefit or a cost of an activity that affects third parties.3) ____________ goods are nonrivalrous in consumption and nonexcludable.4) Markets will ____________ public goods because of ____________.5) Markets will under-produce goods that yield external ____________.6) Markets will over-produce goods that generate external ____________.7) Restricting supply with market power will ____________ quantities and ____________ prices.Part 3: Discussion1) Explain why the ideal level of pollution is usually NOT zero.2) Explain the difference between a rivalrous good and a nonrivalrous good and give an example of each.3) Explain the difference between an excludable good and a nonexcludable good and give examples.4) Explain why a private market will NOT produce public goods.Part 4: List the three major goals of macroeconomic intervention1) _____________________________________ 2) ____________________________________ 3. ______________________________