Question 1(1 point)

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

Question 1 options:

a)	competitive markets

b)	equal distribution of income

c)	strong government regulations

d)	inelastic price elasticities of demand

Question 2(1 point)

Which would cause the market to fail?

Question 2 options:

a)	abundant resources

b)	a lack of technology

c)	consumers do not know that a product is addictive

d)	high taxes

Question 3(1 point)

If consumers _________________ the benefit of a product, then too little of the product will be produced compared to what is economically efficient.

Question 3 options:

a)	overestimate

b)	underestimate

Question 4(1 point)

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

Question 4 options:

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

b)	produced by a well-known company.

c)	difficult to evaluated on inspection.

d)	inexpensive.

Question 5(1 point)

Which government action could help correct for an information problem?

Question 5 options:

a)	directly provide certain information to potential consumers

b)	tax products likely to have an actual benefit that is far, far greater than the expected benefit

c)	all of these could help

d)	subsidize products likely to have an actual benefit that is far, far less than the expected benefit

Question 6(1 point)

Which is excludable?

Question 6 options:

a)

sunlight

b)	national defense

c)	the UMUCwebsite

d)

education

Question 7(1 point)

Which is rival in consumption?

Question 7 options:

a)	smells coming from a bakery

b)

pickles

c)	an uncrowded beach

d)	an A in economics (assuming grades are not curved)

Question 8(1 point)

Which is a public good?

Question 8 options:

a)	public restrooms

b)	aerial fireworks display

c)	an ocean dwelling oyster

d)	government run health care facilities

Question 9(1 point)

Patricia was riding her bike and held onto the back of a moving vehicle in order to be dragged to a new location. She was

Question 9 options:

a)	free riding.

b)	uninformed about the risks of her behavior.

c)	a common resource.

d)	irrational.

Question 10(1 point)

The free market tends to ______________ public goods.

Question 10 options:

a)	either underproduce or overproduce

b)	underproduce

c)	efficiently produce

d)	overproduce

Question 11(1 point)

Which is a common resource?

Question 11 options:

a)	public buses

b)	broadcast TV

c)	clean oceans

d)	cancer medication

Question 12(1 point)

Between 1980 and 1990, the population of African elephants was more than halved. This is an example of the

Question 12 options:

a)	tragedy of the commons.

b)	onlooker dilemma.

c)	reality of deadweight loss.

d)	free rider problem.

Question 13(1 point)

Common resources will ______________ when provided only by the free market.

Question 13 options:

a)	be underused

b)	result in actual benefit > expected benefit

c)	be overused

d)	result in actual benefit < expected benefit

Question 14(1 point)

Which is a negative externality?

Question 14 options:

a)	the large screen TV in your living room

b)	the bad smell from a paper factory

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

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

Question 15(1 point)

To deal with a good with negative externalities, the government should

Question 15 options:

a)	subsidize the good in order to increase the quantity produced.

b)	tax the good in order to decrease the quantity produced

c)	tax the good in order to increase the quantity produced.

d)	subsidize the good in order to decrease the quantity produced.

Question 16(1 point)

The market for park rangers has

Question 16 options:

a)	limited supply.

b)	limited demand.

Question 17(1 point)

A lack of competition among suppliers results in

Question 17 options:

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

b)	both a quantity and a price that is too high.

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

d)	both a quantity and a price that is too low.

Question 18(1 point)

In which situation is the market for gizmos likely to fail?

Question 18 options:

a)	gizmos are very expensive to produce

b)	consumers know that gizmos are dangerous

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

d)	there is only one company that produces gizmos