1.3 Market failure

Welfare loss is where

• SC>SB at the overproduction

• SC=SB

• PC>PB at the overproduction

• total surplus increases

External cost is where

• SC>PC

• SB>PB

• SC<PC

• SB<PB

Positive externality refers to a

• benefit to a third party

• cost to a third party

• cost to a producer

• benefit to a consumer

Public goods are both...

• rival and excludable

• rival and non-excludable

• non-rival and excludable

• non-rival and non-excludable

the free rider problem occurs because.....

• public goods are non-rival

• public goods are non-excludable

• private goods are rival

• private goods are excludable

which of the following is NOT a market failure

• public goods

• externalities

• information failure

• quasi-public goods

The social optimum is the output level where

• MPB=MPC

• MPB=MSB

• MSB=MSC

• MPC=MSC

The social optimum refers to which of the following types of economic efficiency?

• Productive

• Dynamic

• X

• Allocative

Which of the following markets is the worst example of asymmetric information?

• Currency

• Banking

• Insurance

• Dentistry

Which of the following is a third party associated with the textiles industry

• H + M

• UK shopper

• Textiles factory worker

• local residents in a village near a textiles factory