Exam 35: Market Failures Public Goods, Market Power, and Externalities

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A) explicit costs are known in advance; implicit costs arise later.
B) explicit costs require an actual outlay of money; implicit costs allow the use of credit cards.
C) explicit costs require an actual outlay of money; implicit costs are opportunity costs.
D) explicit costs are costs paid by the firm; implicit costs are costs paid by others.

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A) high prices.
B) perfect competition.
C) excess demand.
D) externalities

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A) that two people cannot simultaneously consume the same good.
B) that obtaining a good is the outcome of a contest between rivals.
C) that it is not possible to prevent people from consuming a good.
D) that it is not possible to obtain all of the benefits from consuming a good.

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A) because it provides protection for the public.
B) because it is provided by the government.
C) because it is nonexcludable and nonrival.
D) because it promotes economic prosperity in the military armaments industry.

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A) Income taxes used to fund various federal government programs.
B) Sales taxes used to fund state and local governments.
C) Gasoline taxes used to fund highway construction.
D) Property taxes used to fund public education.

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A) Whether taxes are progressive or regressive.
B) Whether taxes are inexpensive to collect .
C) Whether people who receive higher benefits pay also pay higher taxes.
D) Whether taxes are sufficient to cover government expenditures.

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A) Private goods are subject to the exclusion principle and rival consumption; public goods are not.
B) Private goods are subject to externalities and market failures; public goods are not.
C) Private goods are goods owned by individuals and businesses; public goods are owned by the government.
D) Private goods are subject to the equity principle and the ability-to-pay principle; public goods are not.

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A) two ways to measure the efficiency of taxation.
B) two ways to measure the equity of taxation.
C) two ways to measure market failures.
D) two ways to analyze externalities.

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A) a person who receives benefits from public goods, but does not pay for them.
B) a person who receives benefits from private goods, but does not pay for them.
C) a person who refuses to pay income taxes.
D) a person who rides for free at an amusement park.

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A) effective enforcement of pollution laws.
B) private bargaining between the polluters and those harmed by the pollution.
C) adaptation of human beings to higher levels of toxic waste.
D) an intervention to stop the polluters actions staged by affected parties and a skilled professional.

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