1 Which of the following is a source of market failure? a perfectly competitive

ID: 1099823 • Letter: 1

Question

1 Which of the following is a source of market failure?

a perfectly competitive markets

b) private goods

c) external costs and benefits

d) voluntary unemployment

2. If all firms were perfectly competitive, which of the following would be TRUE?

a) Resources would be allocated among firms efficiently

b) Final products would be distributed among household efficiently

c) The market systems would produce the things that people want

d) All of the above

3 Suppose there is a permanent shift of consumer preferences away from pretzels and toward potato chips. The most likely result

a) in short run is economic losses in the potato chip market

b) in the long run us a fall in the supply of potato chips

c) in the short run is a rise in the price of pretzels

d) is short-run profits in the potato chip market.

4. A technological change in the way cars are produced will

a) affect only the markets for inputs used to produce cars

b) affect only the way cars are produced

c) have no effect on consumers

d) affect input and output markets in the automobile industry and other related industries.

1. c) external costs and benefits

2. a) Resources would be allocated among firms efficiently

3. d) is short-run profits in the potato chip market.

4. d) affect input and output markets in the automobile industry and other related industries.

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