Economics Mcqs

A. public goods should be produced up to the point where the additional benefit received by society equals the additional cost of producing the good
B. under certain conditions, private parties can arrive at the efficient solution without government involvement
C. the private sector will fail to produce the efficient amount of a public good because of the free-rider problem.
D. if there are external costs in production the government must intervene in the market to assure that the efficient level of output is produced

A. variable cost of producing the good
B. average cost of producing the good
C. marginal cost of producing the good
D. total cost of producing the good

A. Pareto goods
B. public goods
C. private goods
D. free goods

A. When firms are not profit maximisers
B. When firms have some control over price and competition
C. When the consumption of the good involves an external benefit
D. Whenever firms are losing money.

A. efficiency analysis
B. partial equilibrium analysis
C. general equilibrium analysis
D. equity analysis

A. decision makers do not take them into account
B. all firms are perfectly competitive
C. the externalities are negative
D. all firms are monopolistic

A. Marginal benefit equals marginal damage cost
B. marginal benefits equals marginal social cost
C. marginal benefit equals marginal private cost
D. marginal social cost equals marginal external cost

A. technically efficient.
B. inefficient.
C. potentially efficient
D. unequivocally Pareto optimal

A. elected officials will act selflessly for the good of society and ignore their own self interest
B. the managers of government agencies are trying to maximize the profit of their agency and they ignore the implications that this has on other departments
C. the optimal level of public goods may be too expensive for the society to produce
D. the measurement of social damages and benefits is difficult and imprecise

A. The coase theorem
B. Arrow’s impossibility theorem
C. the drop -in-the bucket problem.
the free rider problem