Question1

Which is required for a free market to result in an efficient use of resources?

Question 1 options:

a)

well regulated supply and demand

b)

the availability of low cost resources

c)

businesses that care about people instead of profits

d)

well defined and enforced property rights

Question 2

Which would cause the market to fail?

Question 2 options:

a)

Good X is expensive

b)

many consumers want Good X

c)

consumers know that Good X is dangerous

d)

it is unclear who owns Good X

Question 3

If the expected benefit is _________________ the actual benefit, then too much of the product will be produced compared to what is economically efficient.

Question 3 options:

a)

less than

b)

greater than

Question 4

Market failure will most likely arise from poor information when the product is

Question 4 options:

a)

produced by a unknown company.

b)

easily evaluated on inspection.

c)

likely to be purchased from the same seller in the future.

d)

inexpensive.

Question 5

Which government action could help correct for an information problem?

Question 5 options:

a)

all of these could help

b)

directly provide certain information to potential consumers

c)

subsidize products likely to have an actual benefit that is far, far greater than the expected benefit

d)

tax products likely to have an actual benefit that is far, far less than the expected benefit

Question 6

Which is excludable?

Question 6 options:

a)

smells coming from a bakery

b)

a statue placed in Central Park

c)

clean air

d)

an oil change

Question 7

Which is rival in consumption?

Question 7 options:

a)

pickles

b)

an uncrowded beach

c)

an A in economics (assuming grades are not curved)

d)

smells coming from a bakery

Question 8

Which is a public good?

Question 8 options:

a)

cancer medication

b)

broadcast TV

c)

public buses

d)

clean oceans

Question 9

In August, Monica goes to the mall just to enjoy the air conditioning. This is an example of the

Question 9 options:

a)

reality of dead weight loss.

b)

free rider problem.

c)

onlooker dilemma.

d)

tragedy of the commons.

Question 10

Public goods will ______________ when provided only by the free market.

Question 10 options:

a)

be under produced

b)

result in negative externalities

c)

result in positive externalities

d)

be overproduced

Question 11

Which is a common resource?

Question 11 options:

a)

a crowded sidewalk

b)

an HD TV

c)

the UMUC website

d)

education

Question 12

White rhinos are on the verge of extinction. This is an example of the

Question 12 options:

a)

reality of dead weight loss.

b)

onlooker dilemma.

c)

free rider problem.

d)

tragedy of the commons.

Question 13

To increase efficiency, the government should ______________ common resources.

Question 13 options:

a)

subsidize

b)

restrict the use of

c)

provide free access to

d)

mandate the use of

Question 14

Which is an external cost?

Question 14 options:

a)

the large screen TV in your living room

b)

the shade over your house provided by a neighbor's tree

c)

the high price of gasoline caused by unrest in the Middle East

d)

the bad smell from a paper factory

Question 15

When external benefits are present,

Question 15 options:

a)

less of the good will be produced than is efficiency.

b)

corresponding external costs are always generated.

c)

more of the good will be produced than is efficiency.

d)

the economically efficient amount will be produced.

Question 16

The market for firefighters has

Question 16 options:

a)

limited supply.

b)

limited demand.

Question 17

A lack of competition among suppliers results in

Question 17 options:

a)

both a quantity and a price that is too high.

b)

a price that is too high and a quantity that is too low.

c)

both a quantity and a price that is too low.

d)

a price that is too low a quantity that is too high.

Question 18

In which situation is the market for gizmos NOT likely to fail?

Question 18 options:

a)

there is only one company that produces gizmos

b)

consumers significantly underestimate the benefit of gizmos

c)

gizmos are a public good

d)

gizmo producers care more about profit than about the well-being of society