Market Failure MCQs

Market Failure MCQs

Our team has conducted extensive research to compile a set of Elasticities in Microeconomics MCQs. We encourage you to test your Elasticities in Microeconomics knowledge by answering these 20 multiple-choice questions provided below.
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1: Situation where an informed party benefits in an exchange by taking advantage of knowing more than the other party is called

A.   Anti selection

B.   Death spiral

C.   Adverse selection

2: _________ information is When the available information is initially distributed in favor of one party relative to another

A.   Imperfect information

B.   Perfect information

C.   Symmetric information

D.   Asymmetric information

3: According to _________ property rights are defined in a clear-cut fashion

A.   Coase Theorem

B.   First Welfare Theorem

C.   Second Welfare Theorem

D.   Nash's equilibrium existence Theorem

4: _____ are Goods that are nonrival in consumption and excludable

A.   Private Good

B.   Public Good

C.   Consumer Good

D.   Club Good

5: Common resource is a good that is rival in ____ and nonexcludable

A.   Production

B.   Consumption

C.   Both of These

D.   None of These

6: Someone who derives benefits from something not paid for is Known as

A.   Consumer

B.   Free Rider

C.   Outside party

D.   Product Producer

7: Moral hazard is Taking additional risks because you are

A.   Insured

B.   Thus

C.   Both of these

D.   None of these

8: Negative externality is When ___ spill over to an outside party

A.   Expenses

B.   Costs

C.   Benefits

D.   Loses

9: Positive externality is When ____ spill over to an outside party

A.   Expenses

B.   Costs

C.   Benefits

D.   Loses

10: A good with rivalrous consumption and excludability is called

A.   Private Good

B.   Public Good

C.   Consumer Good

D.   General Good

11: A good that is nonrivalrous in consumption and nonexcludable known as

A.   Private Good

B.   Public Good

C.   Consumer Good

D.   General Good

12: Rights given to a firm to discharge a specified amount of pollution is called

A.   Pollution Control Rights

B.   Transferable pollution Rights

C.   Pollution Control Rights

D.   Pollution transfer Rights

13: How is a firm’s production influenced by a negative externality?

A.   It will produce less than efficient output.

B.   It will produce more than efficient output.

C.   It will produce optimally efficient output.

D.   It will fluctuate between low and high output.

14: Corrective ______ are used to internalize negative externalities.

A.   Regulations

B.   Spillovers

C.   Subsidies

D.   Taxes

15: An educated population is an example of a(n) ______.

A.   Positive externality

B.   Negative externality

C.   Government subsidy

D.   Adverse selection

16: Because of scarcity, clean air ______.

A.   Is free

B.   Has a cost

C.   Does not exist

D.   Is a private good

17: If firms had to pay for the externalities they cause, production costs would ______.

A.   Become indeterminate

B.   Remain unaffected

C.   Increase

D.   Decrease

18: It is probable that pollution regulation is subject to ______.

A.   Increasing returns

B.   Diminishing returns

C.   Being a moral hazard

D.   Being a club good

19: The idea that when the benefits are greater than the costs for some course of action, potential transactions can make some people better off without making anyone worse off is the ______.

A.   Adverse selection

B.   Free ride problem

C.   Moral hazard

D.   Coase theorem

20: Transaction costs exclude ______.

A.   The cost of reaching a mutually acceptable price

B.   The cost of the goods or services bought

C.   Costs associated with negotiating

D.   Costs of executing a transaction

21: Greater numbers of transactors make negotiations______.

A.   Harder

B.   More likely

C.   Faster

D.   Cheaper

22: A private good is ______.

A.   Neither rival nor excludable

B.   Rival, but not excludable

C.   Rival and excludable

D.   Not rival, but excludable

23: The use of public goods is ______.

A.   Limited to one person at a time

B.   Restricted to those who pay for them

C.   Protected from free riders

D.   Available to multiple people

24: Free riders are people who ______.

A.   Take advantage of benefits without paying for them

B.   Provide benefits to other people free-of-charge

C.   Regulate industry by converting private resources to public use

D.   Create technological advances that spill over to other industries

25: Asymmetric information is information that is ______.

A.   So technically complicated most people are unable to interpret it

B.   Available to one party in a transaction but not the other

C.   Known by government officials but withheld from the public

D.   Too late to be used by the participants in an exchange

26: Benefiting from asymmetric information is known as ______.

A.   Moral hazard

B.   Adverse selection

C.   Rival exclusion

D.   Technological spillover

27: In the labor market, things like education level and grades are ______.

A.   Warranties

B.   Adverse selections

C.   Moral hazards

D.   Signals

28: During periods of deflation _____ will be hurt and _____ will be helped.

A.   Firms; borrowers

B.   Borrowers; lenders

C.   Consumers; firms

D.   Home buyers; home sellers