Question 1
What is meant by market failure?
A.
S > D. B.
D > S. C.
Too much or too little produced/consumed vs socially optimum. D.
Total benefit to society.
Question 2
Market failure occurs when:
A.
Output differs from social optimum B.
There is no government C.
Prices always rise D.
S always equals D
Question 3
What is meant by price mechanism?
A.
Too much or too little produced/consumed vs socially optimum. B.
Where social benefit equals social cost. C.
S and D setting market price. D.
Resources not used to maximise welfare.
Question 4
What is meant by information gaps?
A.
Total cost to society. B.
Resources not used to maximise welfare. C.
Asymmetric or incomplete information. D.
Non-rival and non-excludable.
Question 5
Public goods are characterised by:
A.
Rivalry only B.
Perfect information C.
High PED only D.
Non-rivalry and non-excludability
Question 6
What is meant by socially optimum output?
A.
Where social benefit equals social cost. B.
Total cost to society. C.
S and D setting market price. D.
S > D.
Question 7
What is meant by social cost?
A.
S and D setting market price. B.
Total cost to society. C.
S = D at equilibrium. D.
Third-party costs/benefits.
Question 8
What is meant by misallocation?
A.
S and D setting market price. B.
Resources not used to maximise welfare. C.
Total benefit to society. D.
Too much or too little produced/consumed vs socially optimum.
Question 9
What is meant by allocative efficiency?
A.
S and D setting market price. B.
S = D at equilibrium. C.
Too much or too little produced/consumed vs socially optimum. D.
Where social benefit equals social cost.
Question 10
What is meant by excess demand?
A.
Total cost to society. B.
Total benefit to society. C.
Asymmetric or incomplete information. D.
D > S.
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