The problem of special interests financing congressional campaigns and presidential

 The problem of special interests financing congressional campaigns and presidential
                            elections is associated with

a.government failure

b.public choice theory

c.market failure

d.negative externalities

e.government subsidies

152.              The creation of new property forms (such as privatizing a public beach) is one answer to
                            __________ because it would reduce _________ .

a.government failure; market failure

b.market failure; government failure

c.the creation of third parties; public choice

d.dealing with externalities; the number of third parties

e.the inefficiencies of the market; special interests

153.              Who is affected by externalities? Those receiving external benefits differ from those
                            incurring external costs in that external benefits are associated with

a.government intervention

b.market failure

c.unclear property rights

d.third parties

e.free riders

154.              Nonsmoking sections in restaurants are designed to

a.prevent third parties from causing a market failure

b.increase demand by achieving market equilibrium

c.prevent free riders from incurring a negative externality

d.prevent third parties from incurring a negative externality

e.achieve market equilibrium which cannot be achieved without the designated
sections

155.              When airplanes take off and land at Logan Airport, the residents of East Boston complain
                            about the noise. The same planes make the same noise during the trip to Boston from
                            Paris, but on this run, over the Atlantic

a.the sound is muffled at high altitudes, creating less market failure

b.market failure does not apply because it is an international flight

c.there are no externalities because there are no third parties

d.the positive externalities of the flight outweigh the negative externalities of the noise

e.free riders are more numerous so that market failure is eliminated

156.              There are apartments in Chicago whose rooftops overlook Wrigley Field where the
                            Chicago Cubs play at home. On game day you can find free riders on the roof enjoying
                            _____________.

a.a near public good

b.free property rights

c.a positive externality

d.a pure public good

e.excess utility

157.              A couple refuses to mow their lawn. Their neighbors take them to court, using
                            economic logic to argue that

a.property rights are poorly defined because externalities exist

b.they are free riders and entitled to the value of the externalities

c.although there are no third parties because property rights are clear, the market still
generates market failure

d.although property rights are clear, there are still externalities that should be
considered

e.market failure can be avoided if the couple sells their property to any of the
neighbors

158.              In 1997 a community in a Southeastern state passed a beautification ordinance (law
                            prohibiting the placement of indoor furniture outside of homes, i.e., no couches on the
                            porch). The law represents a conflict between __________ and __________.

a.the rich; the poor

b.third parties; private property rights

c.consumers of goods; producers of goods

d.public goods; private goods

e.market failure; government failure

159.              In a society with market failure, there

a.is no pollution

b.are no public goods

c.is an inefficient allocation of resources

d.are no markets

e.is no need for a government

160.              The nice thing about a pollution tax is that it

a.eliminates pollution

b.forces cleanup to occur

c.is imposed only on the market with the externality

d.creates new property rights

e.creates positive externalities to compenstate for negative externalities

 

161.              Asymmetric information describes a situation in which

a.one side of the market – buyer or seller – has more information about the good than does the other side.

b.advertising dominates whatever information consumers have about the good

c.only the seller has information about the good

d.only the buyer has information about the good

e.price is unknown until market day

162.              In the case where cigarette firms conceal information about the negative externalities
                            associated with cigarette smoking, the market is said to be characterized by

a.asymmetric information

b.moral hazard

c.social cost

d.government failure

e.greed

163.              If smokers knew the information cigarette firms conceal about the negative externalities
                            associated with cigarette smoking

a.the supply curve would shift to the right causing price to rise

b.the supply curve would shift to the left causing price to fall

c.the supply curve would shift to the left causing price to rise

d.the demand curve would shift to the left causing price to fall

e.the demand curve would shift to the right causing price to fall

164.              Moral hazard describes a situation in which

a.buyers or sellers react to market signals by altering their behavior in ways that generate adverse market outcomes

b.an action by an individual that endangers others

c.an activity destroys all market outcomes

d.rational behavior is removed from market decision making

e.irrational behavior creates perverse market outcomes