Chapter 3—Spontaneous Order, Markets, and Market Failure Key
1. If the market is unable to allocate resources then
2. The use of government to supplant market outcomes is called
3. A negative externality occurs when
4. When a negative externality is present
5. When a positive externality is present
6. If there are no externalities present in a market
7. Externalities occur when there is a lack of
8. Markets can fail when there is
9. Chickens are not endangered because
10. Public goods
11. In the consumption of public goods
12. “Consumed by one, consumed by all.” This describes
13. Asymmetric information includes the concepts of
14. When people by insurance they often adopt risky behavior. This is an example of
15. Asymmetric information often makes it difficult to tell good from bad. This is a problem of
16. A problem of adverse selection can be addressed by
17. Internalizing the externalities means that
18. Government rules and regulations can, at times,
19. Government rules and regulations can
20. Corruption
21. Government rules and regulations can, at times,
22. If government rules and regulations hurt free trade then
23. A possible problem of democracy
24. If all actions are known to all then there is
25. If government intervention in the market creates market inefficiencies then
26. Markets never fail.
27. Positive and negative externalities can lead to market failure.
28. Negative externalities are benefits that people lose in a transaction.
29. Positive externalities lead to under supply in a market.
30. Negative externalities lead to over supply in a market.
31. Common property can lead to market failure.
32. Public goods are produced by profit-seeking firms.
33. People can be excluded from consuming public goods.
34. Adverse selection and moral hazard are not problems associated with market transaction.
35. Buying insurance can create a moral hazard.
36. When bankers make loans they do not have an adverse selection problem.
37. Clearly defined property rights can create negative externalities.
38. Government failure means that government action reduces market efficiency.
39. Government rules can increase transparency and lower market efficiency.
40. Corruption is only present in developing nations.