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Kluck_Market-Failure

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Last updated almost 4 years ago
13 questions
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Question 1
1.

Question 2
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Question 3
3.

What are the four types of market failures?

Question 4
4.

Question 5
5.

Question 6
6.
A merit good is a good that has _______
Question 7
7.

Question 8
8.

Question 9
9.

Question 10
10.

Question 11
11.

Using the following scenario, determine the type of market failure that is present, what the proposed government solution for that market failure would be, and shift the supply curve, demand curve, or both in the provided graph to show the desired equilibrium that the government intervention would have. Include your answer to the type of failure and proposed solution in a text box underneath the graph.

Scenario: A new type of lightbulb gets discovered that uses half the energy and lasts 10 times as long as a standard incandescent bulb. The invention could revolutionize lighting and reduce our energy output to boot. The problem is that no firm is willing to manufacture it because the long life of the bulb would prevent continual profits from their production.

Question 12
12.

Using the following scenario, determine the type of market failure that is present, what the proposed government solution for that market failure would be, and shift the supply curve, demand curve, or both in the provided graph to show the desired equilibrium that the government intervention would have. Include your answer to the type of failure and proposed solution in a text box underneath the graph.

Scenario: A soft drink company develops a new recipe that has taken the market by storm. The popularity of the new drink has spread across the country but as time goes on its becoming clear that there are negative health consequences to consuming the beverage. The information is available, but the price of the drink has remained as low as it was prior to the discovery of its negative health effects.

Question 13
13.

Using the following scenario, determine the type of market failure that is present, what the proposed government solution for that market failure would be, and shift the supply curve, demand curve, or both in the provided graph to show the desired equilibrium that the government intervention would have. Include your answer to the type of failure and proposed solution in a text box underneath the graph.

Scenario: A software company develops a new type of mail client that allows e-commerce websites to double their productivity. As a result the company becomes wildly successful. However, after several years of business a bug is found in their software that allows third parties to read correspondence between users. The issue is fixed but by that time consumer confidence has waned enough to allow other mail client startups to begin to enter the market. In response the larger company begins buying out the hosting services that platform its competitors forcing the smaller companies to leave the market.

Identify if the following examples represent a market failure or not.
Market Failure
Not a Market Failure
Polution
Fire department
High Gas Prices
Price Ceilings
Public Education
Which of the following is NOT an example of a positive externality?
Benefits of public schools
Benefits of public roads
Benefits of wise investments
Benefits of subsidized trash collection
Which of the following is a public good?
Fire departments
Street lights
Public schools
All of the above
Which of the following describe a public good?
Non-excludable & Non-rivalrous
Non-excludable & rivalrous
Excludable & Non-rivalrous
Excludable & Rivalrous
Which of the following is a possible example of a social marginal cost?
Polution
Increased property value
Increased per unit tax
Inflation
What sort of market failure might a government attempt to resolve through subsidies?
Monopoly
Postive externality
Negative externality
none of the above
What sort of market failure might a government attempt to resolve through a per unit tax?
Monopoly
Negative externality
Positive externality
None of the above
What sort of market failure might a government attempt to resolve through regulation?
Monopoly
Positive externality
Negative externality
Both A and C