Deck 4: Noncompetitive Market Models and Market Failures

Question 1

Which of the following is defined as a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off?

A) Utility maximization
B) Profit maximization
C) Economic equilibrium
D) Pareto efficiency

Answer 1

D

Question 2

Which of the following is used to cover all circumstances in which Pareto efficiency is not achieved by the market?

A) Market equilibrium
B) Market failure
C) Market surplus
D) Market barriers

Answer 2

B

Question 3

Healthcare markets will not lead to Pareto efficiency in the absence of externalities.

Answer 3

False

Question 4

what is the externality for the following description.
-This might arise if a firm producing pharmaceuticals dumps its waste in a river or pollutes the air.

Question 5

what is the externality for the following description.
-If a promising compound is discovered, this will lead to the publication of scientific papers on the compound; therefore, the research undertaken on the compound will lead to the identification of other useful avenues for research.

Question 6

what is the externality for the following description.
-In addition to their effects on individual health, cigarette smoking and alcohol consumption may also have negative effects on the rest of society in terms of passive smoking and antisocial behavior, which are not compensated for in the private market.

Question 7

what is the externality for the following description.
-Vaccines have a direct health benefit on others by reducing their chances of ill health, and they are not being compensated in the private market; therefore, these activities should be subsidized.

Question 8

Which of the following are characteristics of public goods?

A) Nonrivalry
B) Nonexclusivity
C) Nonexcludability
D) Noncompetitive

Question 9

In general, which of the following provides public goods?

A) Hospitals
B) Government
C) Schools
D) Private businesses

Question 10

Most healthcare products and services are not public goods because they are both rival and excludable.

Question 11

The market for health care is characterized by perfect knowledge by both the consumers and providers of care.

Question 12

Which of the following would be considered legal restrictions that prevent other firms from entering the market and providing goods and services similar to existing firms?

A) Scale of production
B) Patents
C) Occupational licensing
D) Price regulations

Question 13

Which piece of legislation prohibits overt collusion?

A) Health Insurance Portability and Accountability Act
B) Affordable Care Act
C) Sherman Antitrust Act
D) Social Security Act