This quiz works best with JavaScript enabled. Home > Economics > Market Dynamics > Market Failures > Market Failures – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Market Failures Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Products that society deems as bad for you A) Merit goods. B) Demerit goods. C) Something with a positive impact on others. D) None of above. Show Answer Correct Answer: B) Demerit goods. 2. An industry that is dominated by a few large firms is A) Monopolistic competition. B) A monopoly. C) Perfect competition. D) An oligopoly. Show Answer Correct Answer: D) An oligopoly. 3. Which two market structures use non-price competition (use of advertising) the most? A) Monopoly and perfect competition. B) Monopolistic competition and oligopoly. C) Pure competition and monopoly. D) Pure monopoly and geographic monopoly. Show Answer Correct Answer: B) Monopolistic competition and oligopoly. 4. The Cleveland Cavaliers are an example of which type of monopoly: A) Technological. B) Geographic. C) Natural. D) Government. Show Answer Correct Answer: B) Geographic. 5. A shortage often occurs because price was ..... equilibrium Price and as a result price will likely A) Below, increase. B) Below, decrease. C) Above, increase. D) Below, decrease. Show Answer Correct Answer: A) Below, increase. 6. If the problem concerns consumption, the diagram will have two curves: A) Marginal (private and social) cost (as the supply curve). B) Marginal (private and social) benefit (as the demand curve). Show Answer Correct Answer: B) Marginal (private and social) benefit (as the demand curve). 7. List the four market structures in order from least competitive to most competitive. A) Oligopoly, Monopoly, Perfect Competition, Monopolistic Competition. B) Perfect Competition, Oligopoly, Monopoly, Monopolistic Competition. C) Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition. D) Monopoly, Monopolistic Competition, Perfect Competition, Oligopoly. Show Answer Correct Answer: C) Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition. 8. True or False-Economies of scale is a situation in which the average cost of production falls as the firms gets larger. A) True. B) False. Show Answer Correct Answer: A) True. 9. "Once a public good is produced, anyone can enjoy it, even those who did not pay for its consumption." This statement describes which economic concept? A) An absence of private property rights. B) Free-rider problem. C) Government Failure. D) None of above. Show Answer Correct Answer: B) Free-rider problem. 10. Which of the following is an example of a common resource? A) Residential housing. B) National defense. C) Restaurant meals. D) Fish in the ocean. Show Answer Correct Answer: D) Fish in the ocean. 11. A ..... Externality occurs when a benefit of production or consumption falls on a 3rd Party. A) Negative. B) Neutral. C) Positive. D) None of above. Show Answer Correct Answer: C) Positive. 12. Firms in this kind of market produce goods that are very close substitutes. A) Perfect Competition. B) Pure Monopoly. C) Monopolistic Competition. D) Oligopoly. Show Answer Correct Answer: C) Monopolistic Competition. 13. Asymmetric information in a market transaction occurs when there is unequal knowledge possessed by the A) Buyer and the government. B) Seller and the government. C) Taxpayer and the government. D) Buyer and the seller. Show Answer Correct Answer: D) Buyer and the seller. 14. What does non-rival mean? A) More than one person can use it. B) Only one person can use it. C) There are direct competitors for a product. D) None of the above. Show Answer Correct Answer: A) More than one person can use it. 15. Selling your old computer on Amazon could be an example of A) Public goods. B) Negative externalities. C) Common access resources. D) Asymmetric information. Show Answer Correct Answer: D) Asymmetric information. 16. What does it mean to internalize an externality? A) Trade permits between firms until the externality decreases to zero through a shift upwards of the MSC curve to intersect at the new optimal level of production. B) The costs that were previously imposed on society are made internal because they are now paid for by the producers entirely. C) The costs that were previously imposed on society are made internal because they are now paid for by the consumers entirely. D) The costs that were previously imposed on society are made internal because they are now paid for by the two parties to the transaction; the producers and the consumers. Show Answer Correct Answer: D) The costs that were previously imposed on society are made internal because they are now paid for by the two parties to the transaction; the producers and the consumers. 17. A situation of market failure is said to exist if; A) Buyers and sellers pay for the true opportunity costs of their actions. B) There are no externalities. C) The government provides merit goods free. D) Third parties in society are affected and not compensated. Show Answer Correct Answer: D) Third parties in society are affected and not compensated. 18. A market failure is best described as A) The concept that a decision made by one party can have negative effects on another party. B) The idea that market forces of supply and demand always provide the maximum benefit for society. C) The idea that market forces of supply and demand do not always provide the maximum benefit for society. D) The concept that a decision made by one party can have positive effects on another party. Show Answer Correct Answer: C) The idea that market forces of supply and demand do not always provide the maximum benefit for society. 19. Google controls 67% of the web search market. The company has grown and branched off into email, online maps, GPS tracking systems, online data storage and mobile phones. There are competitors like Microsoft and Yahoo, but they own just 18% and 11% of the market, respectively. Which market structure best fit Google? A) Perfect competition. B) Monopolistic competition. C) Oligopoly. D) Monopoly. Show Answer Correct Answer: C) Oligopoly. 20. A market where brand-name loyalty is more important than product differentiation, such as in the fast food industry. A) Perfect Competition. B) Pure Monopoly. C) Monopolistic Competition. D) Oligopoly. Show Answer Correct Answer: C) Monopolistic Competition. ← PreviousNext →Related QuizzesMarket Dynamics QuizzesEconomics QuizzesMarket Failures Quiz 1Market Failures Quiz 2Market 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