Econ Chapter 5

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

Brand names/franchising/consumer ratings magazines

Competitive markets generally give consumers and producers correct incentives when:

Property rights are well defined and enforces

Which of the following is the most fundamental function of government

Protection of individuals and their property

Which of the following correctly describes the external benefit resulting from an individual's purchase of a winter flu shot?

The flu shot reduces the likelihood others will catch the flu.

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?

The price will be too low and the output will be too large

Economic Efficiency requires that

all economic activity generating more benefits than costs be undertaken

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

an output of the product that is less than the amount consistent with idea economic efficiency

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

individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good.

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

national defense

When production of a good generates external costs, the

supply curve for the good will understate the true social cost of producing the good