When market failures occur, A. buyers and sellers will correct the market failures. B. the price system will correct the market failures. C. the government can step in to correct the market failure. D. the invisible hand will correct for the market failures. When costs spill over to third parties, there is a(n) A. excessive competition. B. cost overrun C. government subsidy. D. negative externality. When a steel producer pollutes the air, economists argue that there is A. a positive externality. B. a cost paid solely by the steel producer. C. efficiency, if production is at its maximum level. D. an external cost. If the government wishes to correct the existence of a negative externality, it could A. grant subsidies to consumers to stimulate demand. B. impose taxes on consumers to stimulate demand. C. impose a tax on the producers to reduce supply. D. grant subsidies to producers to reduce supply Graphically, the effects of an external benefit can be shown as A. a downward movement along the market demand curve. B. a leftward shift of the market demand curve. C. a leftward shift of the market supply curve. D. a rightward shift of the market demand curve. All of the following are economic functions of the government EXCEPT A. providing a legal system. B. promoting competition in the market. C. providing public goods. D. determining the wage rate for most jobs. Private goods are goods A. that are produced by the government. B. for which price is greater than zero. C. for which the more one person has the less is available for someone else. D. that carry a price. Which of the following goods is NOT subject to the freerider problem? A. a public park B. the local police force C. public fireworks D. a mass transit system Which of the following does NOT describe the intended purpose of the antitrust laws of the United States? A. To prohibit certain economic activities that promote trade B. To promote competition within the economic system C. To restrict the formation of monopolies D. To reduce the power of monopolies A payment that is made by the government for which no goods or services are given in return is known as A. a negative externality. B. a transfer payment. C. a free rider. D. a public good