1、MarketFailures1.Whenproducersdonothavetopaythefullcostofproducingaproduct,theytendto A. overproducetheproductbecauseofademand-sidemarketfailure.B. underproducetheproductbecauseofademand-sidemarketfailure.C. underproducetheproductbecauseofasupply-sidemarketfailure.D. overproducethepr
2、oductbecauseofasupply-sidemarketfailure. 2.Inasituationwhereanexternalityoccurs,the"thirdparty"referstothosewho A. buytheproductfromothers.B. producetheproductforothers.C. tradetheproductwithothersoutsidethenationorcommunity.D. arenotdirectlyinvolvedinthetransactionoractivity. 3.Ext
3、ernalbenefitsinconsumptionrefertobenefitsaccruingtothose A. whoaresellingtheproducttotheconsumers.B. whoboughtandconsumedtheproduct.C. otherthantheoneswhoconsumedtheproduct.D. whoareconsumingtheproductabroad. 4.Usethefollowinginformationtoanswerthequestionbelow. Itisthecustomforpape
4、rmillslocatedalongsidetheLayzeeRivertodischargewasteproductsintotheriver.Asaresult,operatorsofhydroelectricpower-generatingplantsdownstreamalongtheriverfindthattheymustcleanuptheriver'swaterbeforeitflowsthroughtheirequipment. Inthesituationdescribedabove,wewouldexpectan A. overprodu
5、ctionofpaperinthemills.B. underproductionofpaperinthemills.C. externalcostresultingfromtheproductionofhydroelectricpower.D. attainmentofallocativeefficiencyinthemarket. 5.Apositiveexternalityorspilloverbenefit(additionalsocialbenefit)occurswhen A. productdifferentiationincreasesthev
6、arietyofproductsavailabletoconsumers.B. thebenefitsassociatedwithaproductexceedthoseaccruingtopeoplewhoconsumeit.C. afirmdoesnotbearallofthecostsofproducingagoodorservice.D. firmsearnpositiveeconomicprofits. 6.Anegativeexternalityorspillovercost(additionalsocialcost)occurswhen A. fi
