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Question-1
Externalities are a problem only if:
(A)
The externalities are negative
(B)
Decision makers do not take them into account
(C)
All firms are perfectly competitive
(D)
All firms are monopolistic
Question-2
Which of the following would meet an economist's definition of a public good?
(A)
An elementary school
(B)
A hospital
(C)
A university
(D)
National defense
Question-3
According to Ronald Coase:
(A)
Governments should tax monopolistic supplier of durable goods
(B)
There is an ‘n’ shaped relationship between income inequality and GDP per capita
(C)
Additional greenhouse gases from developing economies can be balanced by a reduction in pollution from highly developed economies
(D)
A monopoly supplier of a durable good would sell all units of output at the perfectly competitive price
Question-4
Market failure occurs when
(A)
Society chooses the optimal mix of output
(B)
When market prices signal what to produce
(C)
When a society does not vote on what should be produced
(D)
The market mechanism does not produce the optimal outcome
Question-5
If some gain and some lose as the result of a proposed change and it can be demonstrated that the value of the gains would exceed the value of the losses, then the change is said to be:
(A)
Unequivocally Pareto optimal
(B)
Potentially efficient
(C)
Inefficient
(D)
Technically efficient
Question-6
If social marginal costs are _____________ private marginal costs, the level of output will be ____________ the socially optimal level.
(A)
Equal to, equal to
(B)
Greater than, higher than
(C)
Less than, lower than
(D)
All of the above
Question-7
A person will continue to pursue an activity up to the point where:
(A)
Marginal benefit equals marginal private cost
(B)
Marginal social cost equals marginal external cost
(C)
Marginal benefit equals marginal social cost
(D)
Marginal benefit equals marginal damage cost
Question-8
When markets are imperfect and exhibit externalities:
(A)
Government intervention will not improve market performance
(B)
There is an inefficient allocation and use of society's scarce resources
(C)
Society's well-being is not affected
(D)
Government intervention will always improve market performance
Question-9
The social demand minus the externalities represents:
(A)
The difference in price
(B)
The level of public goods
(C)
The optimal mix of output
(D)
The market demand
Question-10
Externalities are defined as
(A)
The "spillover" effect from production or consumption of goods and services
(B)
Government regulations, which limit the number of people a firm can hire
(C)
Competitors actions, which cause a firm to have to respond
(D)
Lawn maintenance at the factory
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Cambridge Secondary Grade 9
IGCSE
Practice in Related Chapters
Competitive Markets Demand and Supply
The Foundations of Economics
Elasticities
Fundamental Concepts in Economics
The Theory of the Firms Production, Costs, Revenue and Profits
The Theory of the Firm II Market Structures
The Level of Over All Econonic Activity
Aggregate Demand and Aggregate Supply
Macroeconomic Objectives I : Low Unemployment,Low and Stable Rate of Inflation
Demand-Side and Supply-Side Policies
Government Intervention
Macro Economic Objectives II : Economic Growth and Equity in the Distribution of Income
Market Failure
International Trade
Exchange Rates and the Balance of Payments
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