Question 11

The policy of laissez-faire was

a.promoted by John Stuart Mill

b.attacked by Adam Smith

c.suggested by Karl Marx

d.invented by Lyndon Johnson

Question 12

The free rider problem refers to people who

a.will only consume a public good if it is free.

b.are not willing to pay for a public good because they lack information about its potential benefits.

c.will not voluntarily pay for a public good even though they would benefit from its provision.

d.for efficiency's sake, should be allowed to consume public goods (such as mass transit) even if they do not pay.

Question 13

In the United States, production by federal, state, and local government

a.exceeds the levels in Western Europe through U.S. nationalization of private enterprises.

b.can include electricity, education, and garbage collection.

c.is banned under the Constitution (except for printing money).

d.never competes directly with private firms.

Question 14

When a market cannot function competitively, one reason for government intervention is.

a.the government is more likely than private firms to produce in a least-cost fashion.

b.regulation is unambiguously more inefficient than government production.

c.the private market is not likely to produce at the socially efficient output level.

d.consumer sovereignty is better protected under government provision of output.