ECON 213 ECON213 Chapter 5 Difficult Cases for the Market and the Role of Government (Liberty University)

ECON 213 ECON213 Chapter 5 Difficult Cases for the Market and the Role of Government (Liberty University)


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ECON213 Chapter 5 Difficult Cases for the Market and the Role of Government (Liberty University)

MULTIPLE CHOICE (168 questions)

1.Which of the following is the most fundamental function of government?

2.Economic efficiency requires that

3.When production of a good generates external costs, the

4.From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to

5.Competitive markets generally give consumers and producers correct incentives when

6.Which of the following correctly describes theĀ external benefitĀ resulting from an individual's purchase of a winter flu shot?

7.Which of the following is the best example of a public good?

8.Markets may have difficulty providing the proper quantity of a public good because

9.Suppose paper pulp mills are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of paper in a competitive market compare with their values under conditions of ideal economic efficiency?

10.Which of the following is a source of information that helps consumers acquire information about the quality of a good or service?

11.The idea that an action should be undertaken if and only if the benefits exceed the costs is known as the concept of

12.When economists say that an activity meets the criterion for economic efficiency, they mean

13.If an economic action generates more costs than benefits, the action

14.If the construction of a new roadway would create $10 billion worth of benefits for citizens and would cost $8 billion to construct, then using the criterion of economic efficiency, the roadway

15.If the construction of a new hospital would create $6 million worth of benefits for citizens and would cost $8 million to construct, then using the criterion of economic efficiency, the hospital

16.Which of the following is most consistent with the idea that if it's worth doing, it's worth doing imperfectly?

17.Because the benefits derived from an activity decline as it is expanded, it is generally

18.Which of the following best explains why making automobiles completely safe is not efficient?

19.Economic efficiency indicates that

20.Does economic efficiency indicate that all pollution should be eliminated?

21.There is substantial agreement among scholars that at least two functions of government are legitimate. These two functions are the

22.Which English philosopher argued that people own themselves and, as a result, own the fruits of their labor, and thus, the role of government is to protect these natural rights of individuals?

23.The maintenance of a framework of security and order through the establishment and enforcement of rules under which people can interact peacefully with one another and be secure in their person and property is known as the

24.Which of the following would be a protective function of government?

25.Government provision of goods and services that cannot easily be provided through markets because it is difficult to establish a one-to-one link between payment and consumption of the good is referred to as the

26.Markets fail to allocate resources efficiently when

27.A market transaction causes an externality if someone

28.Many external costs occur because

29.Which of the following is most likely to lead to the underpricing and overuse of an economic resource?

30.The key explanation for the prevalence of waterway pollution is


162.Sam lives next to The Party Pub and its outdoor "beer garden" that features live music. An economics major, Sam considers this a positive externality. Dave, another economics student, lives next to The Party Pub too, but he considers the music a negative externality. Which student, if either, is correct? Why?

163.Is your economics textbook a public or private good? If you conclude that it is a private good, why do we have copyright laws?

164.Is education a public good? Focus on whether it meets the two criteria for being a public good.

165.Why is a stable monetary system essential for the smooth operation of a market system? What would an unstable monetary system be like? Why isn't a barter economy just as efficient as an economy with money?

166.A hilly, public golf course is often used by sledders in the winter. One of the sledders was quoted as saying, "This is public property, so we have just as much a right to be on these hills as anyone else. Besides, when it snows, golfers can't use the course anyway. Sledding doesn't harm anything." Is he correct? Why or why not?

167.Anne has just purchased a new house in a lovely neighborhood. Her neighbors are friendly and even brought her house-warming gifts. Anne, however, has a problem. Her neighbors have cats, and Anne hates cats. Even though the city has a law requiring all outdoor pets to be on a leash, her neighbors ignore it, and the cats roam all over Anne's property. How would an economist describe this situation? Is there anything Anne can do?

168.Sparkle-Bright toothpaste is a new product that advertises it will give you fresh breath and shiny, white teeth. You buy a tube for $1.99, and after brushing, you have both bad breath and dull teeth. Is there a role for the public sector in this situation?

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