Chapter 9 Market Failure: Imperfect Information, External Benefits, and External Costs

| November 9, 2018

49)
The forces of supply and demand will provide a quantity that is
A)
less than the efficient quantity if a good generates external benefits.
B)
more than the efficient quantity if a good generates external benefits.
C)
exactly the efficient quantity if a good generates external benefits.
D)
either more than or less than the efficient quantity if a good generates
external benefits. It is impossible to know whether it will be too much or too
little without more information.

50)
If a private good generates external benefits
A)
the social benefit will be greater than the private benefit.
B)
the social benefit will equal the private benefit.
C)
the social benefit will equal the private benefit minus the external benefit.
D)
the external benefit will equal the private benefit plus the social benefit.

Recall
the Application about towns that built clock towers to help their citizens keep
track of time to answer the following question(s).

51)
Recall the Application. A town tried to prevent free riding by
A)
not putting a clock face on the tower in the direction of those the one who
refused to contribute to building the clock tower.
B)
setting the time wrong on the face of the tower in the direction of those who
refused to contribute to building the clock tower.
C)
making it illegal for those who did not contribute to the clock tower to use
it.
D)
taxing those who would not contribute to the clock tower project.

52)
Recall the Application. Before people generally carried their own time pieces,
towns often built their own clock towers. In these situations there was a free
rider problem because
A)
many people at that time refused to pay taxes.
B)
towns paid for the clock towers with voluntary contributions.
C)
few people could tell time.
D)
only a small fraction of the population was taxed by the towns.

53)
A market in which there are neither external benefits nor external costs is
inefficient.

54)
Externalities always consist of benefits that are not confined to the person or
organization that decides how much of a good to produce or consume.

55)
To be an example of a public good a good must be both rival in consumption and
nonexcludable.

56)
A good is nonrival in consumption if it is not practical to exclude people who
don’t pay for it from enjoying its benefits.

57)
A good is nonexcludable in consumption if it is not practical to exclude people
who don’t pay for it from enjoying its benefits.

58)
If you can consume a good without having to pay for it, the good must be a
public good.

Get a 33 % discount on an order above $ 40
Use the following coupon code:
MERRYXMAS
Get a 33% discount off . Use discount code "MERRYXMAS"
Positive SSL