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Chapter 13

The document consists of multiple-choice questions related to economic concepts such as market failure, external benefits, and the advantages and disadvantages of market economies. It explores the implications of government interventions, the role of face masks in public health, and the impact of education on the economy. Each question prompts critical thinking about economic principles and their real-world applications.

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arasam2029
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6 views

Chapter 13

The document consists of multiple-choice questions related to economic concepts such as market failure, external benefits, and the advantages and disadvantages of market economies. It explores the implications of government interventions, the role of face masks in public health, and the impact of education on the economy. Each question prompts critical thinking about economic principles and their real-world applications.

Uploaded by

arasam2029
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 13

1.For some illnesses, wearing a face mask has a benefit as it could prevent people from
ge>ng infected. Not all people are willing to wear face masks.

Based on the statement above, why would there be an inefficient allocaCon of face masks in
the free market?

A Consumers in the free market only consider private costs and benefits.

B Face masks are non-rival and non-excludable.

C There is abuse of monopoly power by the producer of face masks.

D There is perfect informaCon in the free market.

2.What might be an external benefit of an increase in the number of university graduates in


an economy?

A an increase in revenue for the universiCes from fee-paying students

B an increase in tax revenue from a more producCve labour force

C an increase in graduate employment as a percentage of the working populaCon

D an increase in wages for graduates

3.To reduce traffic congesCon, a government decides to build a new road. There is a toll
charge on the new road.

What is the main purpose of this government intervenCon?

A to address the problem of market failure

B to discourage people from using public transport

C to ensure the supply of transport through the free market

D to obtain revenue from the levy of a toll

4. What is a possible consequence of market failure?

A Consumers have complete informaCon about goods.

B Disequilibrium conCnues in the market.

C Merit goods are under-supplied.


D Some goods are no longer demanded.
5. What is an advantage of a country having a market economic system with a large private
sector?

A Firms can become unprofitable if they do not produce what consumers want.

B Market forces oQen fail to ensure maximum benefits for society.

C Some goods may not be provided at all or not in sufficient quanCty.

D There is an unequal distribuCon of income which can increase over Cme.

6. In recent years, a government has started to make more use of the free market system.
However, they are doing it very slowly to avoid the disadvantages that a free market system
might bring.

What is a possible disadvantage of the free market system?

A decreased incenCve to work

B decreased levels of polluCon

C increased efficiency

D increased inequality of income

7. What is an advantage of a market economy?

A Equilibrium market price clears the market.

B Producers and consumers have the same aims.

C The government has no need to intervene in market

D The lowest price possible is always charged.

8. What is an advantage of a market economy?

A Equilibrium market price clears the market.

B Producers and consumers have the same aims.

C The government has no need to intervene in market

D The lowest price possible is always charged.


9. What is an economist's definiCon of a market?to

A a collecCon of informal retail outlets run by small firms

B a place where traders gather regularly for short periods

C a system that enables individuals and firms to buy and sell goods

D the existence of consumer demand for a good

10.What is an example of an external benefit from an individual cycling, rather than driving,
to work?

A higher cost of building cycle lanes

B improved physical fitness to the individual from cycling

C lower cost of cycling compared with driving to work

D reduced congesCon for other road users

11. Which problem will be reduced by a government subsidy to a firm?

A absence of a public good

B abuse of monopoly power

C overconsumpCon of a demerit good

D underconsumpCon of a merit good

12.Why might a market economy fail to achieve the best use of scarce resources?

A Consumers may lack informaCon about which good to buy.

B Demerit goods are underconsumed.

C Public goods are overconsumed.

D Most resources are owned by the government.

13.What is a disadvantage of a market economic system?

A Entrepreneurs lack incenCves to produce what consumers want.

B Government intervenCon will reduce the efficiency of firms.


C Market dominance by firms can lead to higher prices.

D There is underproducCon of demerit goods.

14 What aspect of demerit goods means they are overproduced?

A clear product informaCon

B high external costs

C high product taxes

D low customer demand

15 What is a cause of market failure?

A many firms

B monopoly

C profit maximisaCon

D specialisaCon

16. Which pair of economic insCtuCons can be found in a market economy?

A local government and chariCes

B monopolies and commercial banks

C naConalised industries and partnerships

D stock exchange and public corporaCons

17. What suggests that there is market failure?

A high producer profits

B high retail prices

C lack of compeCCon

D low levels of investment


16.Which pair of economic insCtuCons can be found in a market economy?

A local government and chariCes

B monopolies and commercial banks

C naConalised industries and partnerships

D stock exchange and public corporaCons

17.Which pair of economic insCtuCons can be found in a market economy?

A local government and chariCes

B monopolies and commercial banks

C naConalised industries and partnerships

D stock exchange and public corporaCons

18.In a private market system certain goods and services would not be available unless the
government intervened.

What does this idenCfy in a private market?

A market distribuCon

B market equilibrium

C market failure

D market structure

19 What causes market failure?

A government provision of services

B social costs equal private costs

C the existence of external benefits

D the existence of perfect compeCCon


20. Cuba is implemenCng free market reforms.

What is a likely advantage of this?

A a wider variety of goods and services produced

B greater equality between the different groups in society

C increased provision of public goods

D less consumpCon of goods with external costs

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