1.4 Market Failure

Question 1

What are externalities?

Answer 1

Spill over affects

Question 2

Example of Positive externally of production

Answer 2

Making honey restores bee population

Question 3

Examples of Negative externality in production

Answer 3

Making cars isn’t eco friendly

Question 4

Example of Positive externality in consumption

Answer 4

Wearing a face mask protects you

Question 5

Example of Negative externality in consumption

Answer 5

Alcohol can cause you to get drunk

Question 6

DWL on an externally graph always points to …

Answer 6

Q2

Question 7

Marginal costs move the ____ curve.

Answer 7

Supply

Question 8

Marginal benefit moves the ___ curve.

Answer 8

Demand

Question 9

A negative externality causes the curve to …

Answer 9

decrease

Question 10

A positive externality causes the curve to …

Answer 10

increase

Question 11

What are public goods?

Answer 11

Non - excludable, non rivalrous goods

Question 12

Example of public good

Answer 12

Street lamps

Question 13

What is the problem with public goods?

Answer 13

Free Rider Problem

Question 14

What is the free rider problem?

Answer 14

Nobody pays to use public goods
so nobody has incentive to make them

Question 15

What do the government do to solve free rider problem?

Answer 15

Pay firms to build them

Question 16

How to make public goods private?

Answer 16

Charge for use (private beaches)

Question 17

What are common pool resources?

Answer 17

Non excludable but rilvarous goods

Question 18

What is the problem with common pool resources?

Answer 18

Tragedy of the commons

Question 19

What is the tragedy of the commons?

Answer 19

We ruin the land for each other

Question 20

What is the common pool resource problem as an externality?

Answer 20

Negative externality in production

Question 21

Example of common pool resource

Answer 21

Cape cod has no more cod because of over fishing.