Lesson 2.8.1
2.8.1 Market failure and marginal social, private and external values Quiz: OCR Economics, Unit 2
20 questions
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Lesson 2.8.1, Market failure and marginal social, private and external values: 20 multiple choice questions for the OCR Economics (H460), Unit 2: The role of markets, written with Revision Ninja.
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The 20 questions
-
What occurs when the free market mechanism leads to a misallocation of resources?
- Price discrimination
- Market equilibrium
- Market failure
- Government failure
-
What term describes costs directly incurred by an individual producer in an economic transaction?
- Marginal external cost
- Marginal private cost
- Marginal social cost
- Opportunity cost
-
Which equation correctly defines Marginal Social Cost (MSC)?
- MPB - MEB
- MPC - MEC
- MPB + MEB
- MPC + MEC
-
Which equation correctly defines Marginal Social Benefit (MSB)?
- MPC + MEC
- MPB - MEB
- MPB + MEB
- MPC - MEC
-
What relationship between MSC and MPC indicates a negative externality of production?
- MSB < MPB
- MSB > MPB
- MSC > MPC
- MSC < MPC
-
What relationship between MSB and MPB indicates a positive externality of consumption?
- MSB < MPB
- MSC < MPC
- MSC > MPC
- MSB > MPB
-
At what point does a free market without government intervention operate?
- MSB = MPC
- MPB = MSC
- MPB = MPC
- MSB = MSC
-
At what point is allocative efficiency socially optimised in a market with externalities?
- MSB = MSC
- MPB = MPC
- MPB = MSC
- MSB = MPC
-
A factory emits smoke that damages neighbouring farms. What type of externality is this?
- Negative production
- Positive consumption
- Positive production
- Negative consumption
-
A person gets a flu vaccine, reducing virus transmission to others. What externality is created?
- Positive production
- Negative consumption
- Positive consumption
- Negative production
-
If marginal private cost is £15 and marginal external cost is £5, what is marginal social cost?
- £15
- £20
- £75
- £10
-
If marginal social benefit is £40 and marginal private benefit is £25, what is marginal external benefit?
- £15
- £25
- £65
- £10
-
What market outcome occurs when negative production externalities are ignored by private producers?
- Overproduction
- Underproduction
- Productive efficiency
- Allocative efficiency
-
What market outcome occurs when positive consumption externalities are ignored by private consumers?
- Social optimum
- Underconsumption
- Productive efficiency
- Overconsumption
-
What term represents the loss of economic welfare caused by market failure?
- Deadweight loss
- Consumer surplus
- Producer surplus
- External cost
-
What type of good is overconsumed in a free market due to imperfect information?
- Public good
- Free good
- Merit good
- Demerit good
-
What type of good is underprovided in a free market because external benefits are ignored?
- Merit good
- Public good
- Quasi-public good
- Demerit good
-
In a market overproducing by 10 units where MSC exceeds MSB by £4, what is deadweight loss?
- £14
- £40
- £20
- £2.50
-
Secondary smoke inhaled by bystanders when a person smokes is an example of what?
- Negative production
- Positive production
- Negative consumption
- Positive consumption
-
What type of market failure occurs when a market fails completely to supply a good?
- Complete market failure
- Information asymmetry
- Government failure
- Partial market failure
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