Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?
What will be an ideal response?
Ques. 2When two variables have an inverse relationship, the slope is
A) negative.
B) positive.
C) infinity.
D) zero.
Ques. 3All of the following will cause a shift in the supply of smartphones EXCEPT
A) a decrease in the prices of smartphones.
B) an increase in the cost of producing smartphones.
C) a per-unit government subsidy on the production of smartphones.
D) a decrease in the number of smartphone manufacturers.
Ques. 4When investment occurs in developing nations
A) investors hope to gain significant returns on their investment and residents gain higher rates of economic growth.
B) higher rates of economic growth are usually not achieved.
C) significant levels of pollution usually occur.
D) government politicians usually benefit from the illegal payments made to secure the investment.
Ques. 5Regulators employ average cost pricing instead of marginal cost pricing because
A) average cost pricing is more efficient than marginal cost pricing.
B) price must be high enough to cover all opportunity costs if the firm is to stay in business.
C) the price is lower with average cost pricing.
D) average cost pricing is simpler to compute than marginal cost pricing.
Ques. 6The more society consumes today
A) the more it consumes next year.
B) the harder it will be to consume less in the future because people will find it hard to adjust to less.
C) the less society can consume in the future.
D) the easier it will be to consume less in the future.
Ques. 7Instituting a rent control program will most likely lead to
A) a shortage of rental units.
B) overly elaborate and expensive construction.
C) an efficient allocation of existing units among consumers.
D) an excess quantity supplied of rental units.
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