Lesson 2.9.2
2.9.2 Merit and demerit goods Quiz: OCR Economics, Unit 2
20 questions
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Lesson 2.9.2, Merit and demerit goods: 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
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What type of good is under-consumed in a free market due to information failure?
- Public good
- Merit good
- Demerit good
- Free good
-
What type of good is over-consumed in a free market due to information failure?
- Quasi-public good
- Merit good
- Demerit good
- Public good
-
What term describes a situation where one party in a transaction possesses more knowledge than another?
- Symmetric information
- Moral hazard
- Asymmetric information
- Bounded rationality
-
What term describes changing behaviour to take greater risks after obtaining insurance coverage?
- Moral hazard
- Price discrimination
- Adverse selection
- Market rigging
-
What type of externality is generated during the consumption of a merit good?
- External cost
- External benefit
- Financial loss
- Private cost
-
What type of externality is generated during the consumption of a demerit good?
- External benefit
- External cost
- Social dividend
- Private benefit
-
Why do consumers fail to consume the socially optimal quantity of merit goods?
- Perfect competition
- Imperfect information
- Excessive income
- Perfect information
-
A driver drives recklessly after buying comprehensive car insurance. What concept does this illustrate?
- Adverse selection
- Public good
- Information symmetry
- Moral hazard
-
A second-hand car seller hides a known mechanical defect from potential buyers. This is an example of:
- Moral hazard
- Public good
- Symmetric information
- Asymmetric information
-
Education confers benefits to students as well as wider society. Education is best classified as a:
- Demerit good
- Inferior good
- Pure public good
- Merit good
-
Cigarettes create negative health spillover effects on non-smokers. Cigarettes are an example of a:
- Public good
- Normal good
- Demerit good
- Merit good
-
In an unadjusted free market, merit goods are consistently produced and consumed at levels that are:
- Equal to MSB
- Below socially optimal
- Maximising total utility
- Above socially optimal
-
In an unadjusted free market, demerit goods are consistently produced and consumed at levels that are:
- Below socially optimal
- Above socially optimal
- Equal to MSC
- Socially efficient
-
What government policy directly helps consumers make informed choices about demerit goods?
- Subsidies
- Indirect taxation
- Maximum prices
- Information provision
-
Vaccines protect the recipient and reduce disease transmission to others. Vaccines generate:
- Negative externalities
- External benefits
- External costs
- Private costs
-
Which concept describes high-risk individuals being more likely to purchase health insurance before contract agreement?
- Moral hazard
- Principal-agent problem
- Adverse selection
- Free rider problem
-
At the free market equilibrium quantity for a merit good, marginal private benefit is:
- Equal to MSC
- Greater than MSB
- Less than MSB
- Zero
-
At the free market equilibrium quantity for a demerit good, marginal private cost is:
- Equal to MSB
- Zero
- Less than MSC
- Greater than MSC
-
Which intervention directly lowers the consumer price of a merit good to encourage consumption?
- Indirect tax
- Subsidy
- Demerit tariff
- Maximum price ceiling
-
What term describes a situation where market forces fail to allocate resources efficiently?
- Price equilibrium
- Government failure
- Allocative efficiency
- Market failure
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