ECON 260 6. The term market failure refers to a market that fails to allocate re

Question

ECON 260 6. The term market failure refers to a market that fails to allocate resources efficiently. A market failure can NOT be caused by a. lack of property rights b. trade off c. market power. d. externalities. 7. An externality exists whenever a. the economy cannot benefit from government intervention b. markets are not able to reach equilibrium. d. a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that c. a firm sells its product in a foreign market. effect. 8. Goods that are neither excludable nor rival in consumption would be considered public goods. Which of the following would be considered a public good? a. a hiking trail. b. a bicycle. c. a street light. d. a boat. 9. Which of the following would not be considered a private good? a. a pair of jeans. b. an apple. c. a Honda Civic. d. cable TV service. 10. If a firm that uses labor to produce its output, and its marginal product of labor is equal to the increase in its output obtained from one unit increase in labor. When adding another unit of labor leads to an increase in output that is smaller than the increases in out that resulted from adding previous units of labor, the production function of the firm has the property of a. diminishing output. c. negative marginal product put b. diminishing marginal product. d. diminishing labor

Explanation / Answer

1- market power doesnt lead to market faliure, it just lead to ineffeciency,

so answer is C

2- externality means that due to the actions ofone person the other person is getting affacted and first person isnt even paying for that.

so answer is D

3- streelt light is a public goods because we can use it when others are using and we cant stop others from using it whom havent paid for it

so answer is C

4- Cable tv service isnt a private good.

rest of them are used only when paid and cant be used by others when one person is using them,

so answer is D

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