Question 1

It is clear that dry-cleaning establishments are a major source of air pollution.What can you conclude about the price and output of dry-cleaning services? Why does excess pollution occur and what can be done about it?

Accepted Answer

The answer of It is clear that dry-cleaning establishments are...

Question 2

An inequitable allocation of resources implies an equitable distribution of wealth.

Accepted Answer

An inequitable allocation of resources would mean that certain individuals or groups have greater access to resources than others, which would likely exacerbate wealth inequalities rather than promoting an equitable distribution of wealth.

Question 3

Discuss and explain why and how demand and supply may not lead to the allocation of some resources to their best uses.

Accepted Answer

The answer of Discuss and explain why and how demand...

Question 4

How does a competitive market guide the maximizing choices made by consumers and firms?

Accepted Answer

The answer of How does a competitive market guide the...

Question 5

The marginal cost of an additional unit of a private good is zero.

Accepted Answer

The marginal cost of producing an additional unit of a private good may not be zero. It depends on the level of production and the availability of resources.

Question 6

A common property resource has exclusive property rights.

Accepted Answer

Common property resources are typically resources that are collectively owned by a group, such as a community. Exclusive property rights mean that one individual or group has sole control over a resource, which is not characteristic of common property resources.

Question 7

The failure to achieve an efficient allocation of resources is called market failure.

Accepted Answer

Market failure occurs when the market does not allocate resources efficiently, resulting in a suboptimal outcome for society.

Question 8

Discuss and explain market failure, public goods, private goods, noncompetitive markets, free riders, and external costs.Explain how they are interrelated.

Accepted Answer

The answer of Discuss and explain market failure, public goods,...

Question 9

Discuss and explain the terms efficiency, inefficiency, the efficiency condition, equitable and inequitable, and income distribution.

Accepted Answer

The answer of Discuss and explain the terms efficiency, inefficiency,...

Question 10

An inefficient allocation of resources is one that does not maximize the net benefits of each activity.

Accepted Answer

An inefficient allocation of resources means that resources are not being used to their best potential, which leads to less net benefits from each activity. This can happen due to factors like incomplete information, market failures, or government regulations.

Question 11

Free riders consume a public good without paying for it.

Accepted Answer

Free riders benefit from the provision of a public good without contributing to its cost, resulting in an inefficient allocation of resources.

Question 12

Discuss and explain the role of property rights in an exchange economy.Explain the two characteristics property rights must have if efficient exchange is to take place.

Accepted Answer

The answer of Discuss and explain the role of property...

Question 13

Discuss and explain marginal cost, marginal benefit, the marginal decision rule, and constraint(s) in maximization of an objective or goal.

Accepted Answer

The answer of Discuss and explain marginal cost, marginal benefit,...

Question 14

Market failure occurs because market participants face the full costs and benefits of their choices.

Accepted Answer

This statement is incorrect. Market failure occurs precisely because market participants do not face the full costs and/or benefits of their choices. Externalities, information asymmetry, and public goods are examples of market failures that arise precisely because market participants do not take into account all the costs and benefits of their actions.

Question 15

What are the roles government might play in attempting to correct the misallocation of resources in the market economy.

Accepted Answer

The answer of What are the roles government might play...

Question 16

Explain the approach through which decisionmakers can maximize the return from an activity.

Accepted Answer

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Question 17

Buffalo nearly became extinct despite efforts to stop buffalo hunters from pursuing them.They are now no longer endangered.Explain how barbed wire and the eventual ownership of buffalo have resulted in buffalo being raised much like cattle today.

Accepted Answer

The answer of Buffalo nearly became extinct despite efforts to...

Question 18

Explain the characteristics of and the differences between public goods and private goods.Give examples of each and discuss why they are classified the way they are.

Accepted Answer

The answer of Explain the characteristics of and the differences...

Question 19

A public good is one for which the cost of exclusion is prohibitive and for which the marginal cost of provision to another consumer is zero.

Accepted Answer

This is the definition of a public good according to economic theory. The cost of excluding someone from the benefits of the good is too high and providing the good to an additional person does not increase the marginal cost.

Quiz 6: Markets, Maximizers, and Efficiency