Market Failures Adaptive Learning Assignment

Transaction costs

Involve the costs in terms of time energy and resources associated with searching out negotiating and completing a transaction.

negative

Many of the goods that are taxed by the government, such as cigarettes', gasoline, and alcohol generate ______ externalities.

The marginal benefit of preventing pollution is:

Measured in terms of reduced health expenses and improved living standards.

True

Pollution is an example of an economic bad. As a result it causes negative externality in the economy.

Private markets fail to provide the optimal amount of some goods, such as public firework displays because:

Private companies will have difficulty getting anybody to pay for them.

nonrival and nonexcludable

Private markets fail to provide the optimal amount of public goods , because public goods are _________ and ________.

costs

Private supply is the supply of a good or service that reflects only the private ______ of its production.

The exclusive right to determine how a resource is used:

Refers to property rights

private ; external

Social demand is the demand for a good or service that reflects both the _____ and ______ benefits of its consumption.

private ; external

Social supply is the supply of a good or service that reflects both the _______ and _______ costs of its production.

negative externality

Suppose you live near a large factory that produces a good that you do not consume. If you are subjected to loud noises and bad odors from the factory than you experienced a ______ _____.

Positive externality

The benefit enjoyed by a third party that is not directly involved in the production or consumption of a good or service is called:

Private demand is:

The demand for a good or service that considers only the private benefits of its consumption.

private demand

The demand for a good or service that considers only the private benefits of its consumptions is called:

In general, the optimal level of pollution to either prevent or to clean up occurs where:

The marginal benefits of preventing pollution equals the marginal cost of preventing pollution.

If some people can be prevented or excluded from consuming a good or service then that good or service is called:

excludable

externality

A positive ______ is the unpaid benefit of an activity that is enjoyed by a third party.

externality

A positive ________ is the unpaid benefit of an activity that is enjoyed by a third party.

Something we would rather have less of is called:

An economic bad

private good

Any good or service that is rivalrous and excludable is a __________.

MB=MC

At the optimal level of pollution

What would be a reason why the government would choose to tax the sale of cigarettes?

Cigarettes generate negative externalities

Ceteris Paribus, what do you expect to happen to the equilibrium quantity of pollution prevented if the marginal benefit of pollution prevention decreases?

Equilibrium quantity decreases

If the marginal benefit of pollution increases, what happens to the equilibrium quantity of pollution?

Equilibrium quantity of pollution increases

costs ; benefits

From economic perspective pollution involves ____ and ______.

allocative ; productive

The market interaction between buyers and sellers result in ______ and productive efficiency.

If the marginal cost of a pollution prevention program excess the marginal benefit of the program:

The program will not proceed

The high cost of pollution reduction program that increases access to cleaner water and reduces airborne industrial waste from factories could be offset by:

The reduction in health-care expenses due to cleaner air.

Negative externality

The uncompensated cost of an activity that is imposed on a third party is called:

In general when people have ownership (or control) of a resource

They have incentive to improve it

positive ; private

When a ______ externality exists, the socially optimal level of output will be greater than that resulting from a ______ market.

negative ; private

When a ______ externality exists, the socially optimal level of output will be less than that resulting from a ______ market.

consumption

When goods and services are non-rivalrous, the ________ of a good or service by one person does not change the quantity available for consumption by others.

excludable

When people can be prevented or excluded from consuming a good or service, that good or service is said to be ___________.

free rider problem

When people consume a nonexcludable good without paying for it, it is called the __________________.

nonexcludable

When some people cannot be prevented or excluded from consuming a good or service, that good or service is sad to be:

nonrival

When the consumption of a good or service by one person does not change the quantity available for consumption by others, the characteristics of the public good we are talking about is _______.

market failure

When the market does not produce an output an output level that maximizes total surplus it is called a __________.

allocative ; productive

When there is ______ and _____ efficiency, the market produces the right goods in the correct amount using the fewest resources possible.

Property

_______ rights involve the exclusive right to determine how a resource is used.

Private

________ supply is the supply of a good or service that considers only the private costs of its production.