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Question-1
All of the following statements are correct about the Kuznets curve except:
(A)
China and India have reached the peak of the curve
(B)
The United States are not at the peak of the curve yet
(C)
It suggests that additional greenhouse gases from developing economies can be balanced by a reduction in pollution from highly developed economies
(D)
It describes an ‘n’ shaped relationship between income inequality and GDP per capita
Question-2
All of the following statements are correct except:
(A)
When marginal social costs are greater than marginal private costs, there is a negative externality
(B)
When marginal social benefits are higher than marginal private benefits, governments should subsidize production
(C)
When marginal social costs are higher than marginal private costs, governments should tax production
(D)
When marginal private costs are equal to marginal private benefits, the level of output is socially optimal
Question-3
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-4
All of the following statements are incorrect except:
(A)
When marginal social benefits are lower than marginal private benefits, output is at its optimal level
(B)
Loud music is an example of negative benefit externality
(C)
Marginal social benefits can never be larger than private social benefits
(D)
When marginal social benefits are greater than marginal private benefits, there is a negative externality
Question-5
When you consume good Q, not only do you benefit from consuming the good, but other people benefit from your consumption as well. If firms produce good Q where P = MC, firms will be producing:
(A)
Less than the efficient level of output
(B)
The efficient level of output
(C)
More than the efficient level of output
(D)
So that consumer surplus is zero
Question-6
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-7
All of the following statements are wrong except:
(A)
A monopoly will always be Pareto efficient
(B)
A perfectly competitive market is not always Pareto efficient
(C)
Redistribution of income from producers to consumers can restore Pareto efficiency
(D)
The presence of externalities will preclude Pareto efficiency
Question-8
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-9
If a large number of individuals are affected by an external benefit, private bargaining will not work because of:
(A)
The Coase theorem.
(B)
The fallacy of composition.
(C)
The free-rider problem.
(D)
Non-rivalry.
Question-10
An externality is an example of a market failure because:
(A)
A good can be consumed by many people without having to pay for it
(B)
The market is under-producing a good
(C)
The price of the product does not reflect all costs
(D)
The price does not fluctuate with supply and demand
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Cambridge Secondary Grade 10
IGCSE
Practice in Related Chapters
Demand-Side and Supply-Side Policies
Elasticities
Competitive Markets Demand and Supply
The Foundation of Economics
The Theory of the Firms Production, Costs, Revenue and Profits
The Theory of the Firm II Market Structures
The Level of Over All Economic Activity
Aggregate Demand and Aggregate Supply
Government Intervention
Macroeconomic Objectives I : Low Unemployment,Low and Stable Rate of Inflation
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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