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When there are positive externalities associated with the consumption of a good, we can

When there are positive externalities associated with the consumption of a good, we can
                            expect the market

a.demand curve to lie above the social demand curve

b.demand curve to lie below the social demand curve curve to lie above the social supply curve curve to lie below the social supply curve

e.demand curve to lie below the social supply curve

112.              Goods whose benefits to society are not diminished as more people consume them and
                            whose benefits cannot be withheld from anyone are

a.impossible since resources are limited

b.examples of negative externalities

c.public goods

d.typically food and other necessities

e.provided by free markets to free riders

113.              In order to avoid the free-rider problem, which of the following goods is best provided by
                            the government and paid for with tax dollars?




d.prescription drugs

114.              When representatives vote on behalf of the people and make choices about the quantity of
                            public goods provided,

a.the outcome is socially efficient

b.the outcome is the same as if individuals had purchased the goods on the market

c.they reflect the views of all people, not just the voters

d.voter surveys lead to too much of the public good being bought

e.government failure is a likely result

115.              When the criterion used by elected representatives of government who make choices
                            about the production and allocation of public goods is whether the choices promote their
                            own self-interest (staying elected), this is an example of a problem

b.positive externality

c.public choice issue

d.government subsidy failure

116.              Public choice refers to how

a.much publicity a government-sponsored project receives

b.members of government make choices that promote their own self-interest (to keep
their jobs)

c.the public makes choices about what types of goods to buy

d.private decisions often end up becoming public and demand curves reflect public opinion

117.              China’s use of which of the following types of energy is causing high levels of carbon
                            dioxide pollution?


b.natural gas



e.diesel fuel

118.              A third party is a person, or persons, who

a.consumes goods produced from at least two intermediate inputs

b.avoids the transactions of the two principal parties

c.takes risks to avoid externalities

d.internalizes the costs of market failure

e.enjoys benefits or experiences costs imposed on them by the activities of others

119.              Albert and Betty hire Christine and David to play music at their wedding. Elizabeth, who
                            lives behind the church, cannot study because of the loud music. The third party is






120.              Albert, Betty, Christine, and David are all very good students. When they hold their study
                            sessions, they often discuss very difficult concepts in great detail. Christine’s roommate,
                            Elizabeth, who takes completely different classes, still learns from the discussions of the
                            others. This is the case of a(n) _______________ which _______________ a

a.public good; benefits; third party

b.externality; imposes a cost on; free rider failure; results from; third party rider; benefits from; third party

e.externality; benefits; third party


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