This quiz works best with JavaScript enabled. Home > Economics > Market Dynamics > Market Failures > Market Failures – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Negative externalities can be best described as A) When the consumption/production of a good or service has a negative impact on a third party. B) When the consumption/production of a good or service has any impact on a third party. C) When the consumption/production of a good or service depletes the access for a third party. D) When the consumption/production of a good or service has a positive impact on a third party. Show Answer Correct Answer: A) When the consumption/production of a good or service has a negative impact on a third party. 2. Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good? A) Fireworks displays usually take place in a public area. B) Fireworks are a scarce resource. C) Nonpayers cannot be prevented from seeing the fireworks. D) Each consumer pays a fee to see the fireworks. Show Answer Correct Answer: C) Nonpayers cannot be prevented from seeing the fireworks. 3. Monopolistic competition A) Market structure characterized by a single producer in a market. B) Market structure in which a firm has a monopoly because of its location or the small size of the market. C) Market structure having all conditions of pure competition except for identical products. D) Market structure in which the average costs of production are lowest when all output is produced by a single firm. Show Answer Correct Answer: C) Market structure having all conditions of pure competition except for identical products. 4. The market structure with the most control over prices and as a result, the highest prices is: A) Monopoly. B) Monopolistic Competition. C) Perfect Competition. D) Oligopoly. Show Answer Correct Answer: A) Monopoly. 5. Excludable means: A) Someone can deny access to a good. B) Everyone is able to access a good. C) Multiple people can use something at the same time. D) Only one person can use something at one time. Show Answer Correct Answer: A) Someone can deny access to a good. 6. What is the free rider problem? A) Scarcity even when you pay for a good. B) Reaping all the benefits without contributing. C) Common goods that don't have a price. D) HyDEEE never pays for gas. Show Answer Correct Answer: B) Reaping all the benefits without contributing. 7. A shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude nonpayers. Examples:Roads, mail, military. A) Public Good. B) Monopoly. C) Market Failure. D) None of above. Show Answer Correct Answer: A) Public Good. 8. A market in which there are many buyers and many sellers of an identical product ..... A) Collusion. B) Monopoly. C) Oligopoly. D) Perfect competition. Show Answer Correct Answer: D) Perfect competition. 9. Which of the following is a characteristic of perfect competition? A) Barrier to entry. B) Produce homogenous product. C) Price maker. D) One seller in the whole industry. Show Answer Correct Answer: B) Produce homogenous product. 10. Market failures occur when A) The accumulation of wealth in the free market is shared between a large group of people. B) A command economy increases production. C) The economy has a strong GDP and low interest rates. D) The combination of goods and services in the free market is not efficient and optimal. Show Answer Correct Answer: D) The combination of goods and services in the free market is not efficient and optimal. 11. Which of the following market structures would be considered the least competitive? A) Perfect competition. B) Monopolistic competition. C) Oligopoly. D) Monopoly. Show Answer Correct Answer: D) Monopoly. 12. One single firm controls the entire industry. A) Perfect Competition. B) Monopoly. C) Monopolistic Competition. D) Oligopoly. Show Answer Correct Answer: B) Monopoly. 13. Goods and services provided by the government ..... A) Externalities. B) Public Goods. C) Free-Rider Problem. D) None of above. Show Answer Correct Answer: B) Public Goods. 14. Tragedy of the ..... is the idea that common goods that everyone has access to are often misused and exploited. A) Commons. B) Exceptions. C) People. D) Oligarchs. Show Answer Correct Answer: A) Commons. 15. A market structure in which a few large firms dominate a market ..... A) Monopoly. B) Perfect competition. C) Oligopoly. D) Barriers to entry. Show Answer Correct Answer: C) Oligopoly. 16. Government regulations exist to A) Increase economic freedom. B) Protect consumers from negative externalities. C) Punish people who intervene in the free market. D) Provide incentives to privatize. Show Answer Correct Answer: B) Protect consumers from negative externalities. 17. What is the "failure" of public goods? A) People who dont pay for it still get it. B) Only people who pay for it get it. C) It is typically provided by private entrepreneurs. D) None of above. Show Answer Correct Answer: A) People who dont pay for it still get it. 18. Which of the following is an example of a club goods? A) Residential housing. B) National defense. C) Fish in the ocean. D) Cable TV. Show Answer Correct Answer: D) Cable TV. 19. Because barriers to entry are high, firms in perfect competition can't enter or leave the market with ease. A) True. B) False. Show Answer Correct Answer: B) False. 20. If society thinks that the market provides too much, it is because it is a A) Demerit good. B) Merit good. Show Answer Correct Answer: A) Demerit good. ← PreviousNext →Related QuizzesMarket Dynamics QuizzesEconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 3Market Failures Quiz 4Market Failures Quiz 5Market Failures Quiz 6Market Failures Quiz 7Market Failures Quiz 8Market Failures Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books