SCENARIO: Developers of a new housing scheme spend money putting in roads, lighting and clearing land surrounding the scheme. (1) The type of market failure represented by the scenario is a/an a. negative externality b. positive externality c. public good d. asymmetric information (2) The market fails in this scenario because a. no market transaction takes place b. goods are underproduced c. goods are overproduced d. no private provision (3) Solution to the market failure is a. subsidy b. government provision c. taxation d. screening e. signaling
SCENARIO: Developers of a new housing scheme spend money putting in roads, lighting and clearing land surrounding the scheme.
(1) The type of market failure represented by the scenario is a/an
a. negative externality
b. positive externality
c. public good
d. asymmetric information
(2) The market fails in this scenario because
a. no market transaction takes place
b. goods are underproduced
c. goods are overproduced
d. no private provision
(3) Solution to the market failure is
a. subsidy
b. government provision
c.
d. screening
e. signaling
(4) The
a. greater than
b. less than
c. equal to
(5) The private benefit curve is
a. shifts outwards to the social benefit curve
b.shifts inwards to the social benefit curve
c. remains unchanged
(6) The private cost curve is
a. shifts outwards to the
b.shifts inwards to the social cost curve
c. remains unchanged
(7) The Efficient output is found where the → the socially efficient quantity.
a. social cost and social benefit curve intersect
b. private cost and social benefit curve intersect
c. private cost and private benefit curve intersect
d. social cost and private benefit curve intersect
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(4) The
- greater than
- less than
- equal to
(5) The private benefit curve is
- shifts outwards to the social benefit curve
b.shifts inwards to the social benefit curve
- remains unchanged
(6) The private cost curve is
- shifts outwards to the
social cost curve
b.shifts inwards to the social cost curve
- remains unchanged
(7) The Efficient output is found where the → the socially efficient quantity.
- social cost and social benefit curve intersect
- private cost and social benefit curve intersect
- private cost and private benefit curve intersect
- social cost and private benefit curve intersect
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