Supply-side market failures occur when:
A. the demand and supply curves don't reflect consumers' full willingness to pay for a good or
service.
B. the demand and supply curves don't reflect the full cost of producing a good or service.
C. government regulates production of a good or service.
D. a good or service is not supplied because no one wants it.
Answer: B
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Which might be an example of a positive externality?
A) Loud hip-hop music B) A dog gets loose from its master C) A lost wallet filled with twenty-dollar bills D) The rumbling of a Harley Davidson Low Rider motorcycle E) Any of the above, as long as they unintentionally benefit others
Critics of the marginal productivity theory of income distribution claim that the theory is flawed due to:
A. The law of diminishing returns B. The existence of imperfect competition, such as of monopoly and monopsony, in output and resource markets C. The problem of comparing different kinds of resources, such as capital and labor D. Government policies which redistribute income