Question 1. What is meant by "the market system?"

   Question 2. How is the market system justified?

   Question 3. What, exactly, is "fraud?"

   Quesetion 4. What is an "externality?"   Question 5. What is "market failure?"

B. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX   2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand?  How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…

Why is private property, and the protection of property rights, so critical to the success of the market system? How do property rights encourage cooperation?

Which of the following does not create market failure? A. Oil refining creates air pollution B. Airport creates noise pollution C. Production in a competitive market D. A good that is non-rival and non-excludable

1. Many individuals might be willing to contribute $25 to the local community charity drive if they could be assured that others would do so. Explain how the free-rider problem complicates the issue of raising money for charitable purposes. 2. Jones gets a real bargain on 100 acres of land because it is near an airport. He decides to use the land to breed his prize-winning race horses. One year after buying the land, Jones sues the airport because his horses, disrupted by the noise of jet planes, are not breeding. If you were the judge, how would you decide Jones' case? Why?  

How can the tragedy of the commons be averted?   a. The government can implement a price floor. b. Property rights can be assigned. c. The government can implement a cap and trade policy. d. The parties involved can engage in public bargaining.

What are market failures? Discuss examples of market failures. What can government do to improve the results of market failures?

explain whether there has been a market failure, what type of failure, and what measures might solve it,  You should consider: the advantages and disadvantages of any solution whether doing nothing might be the best solution the concept of efficiency. A health insurance provider finds that the health of its customers is much worse than the average health of the population anything else you think important.

The net benefit to society from reducing pollution is equal to Select one: a. the additional benefit plus the additional costs. b. the quantity of pollution, such as the tons of reduction in sulfur dioxide. c. the sum of the benefits of reducing pollution and the costs. d. the difference between the benefits of reducing pollution and the costs.

8. Q Explain what is meant by the term “market failure" by giving two major types of such failures. A (Market failure) is a situation where the competitive market system on its own would either (1) produce the "wrong" amount of certain goods and services as is the case where there are external costs or benefits (i.e., externalities), or (2) fail to allocate any resources to the production of certain goods and services referred to as "( public goods )". 9. ) Refer to the question 8 above and explain the reasons behind each type of failure. Where negative externalities exist, the market system without any intervention will allow some of the costs of private production or consumption to "spill over" onto third parties. There is no market incentive to absorb all of the costs of production if there is a way to get someone else to pay for them. • In such cases of negative externalities, the market cost and price of the product will be too (low high) and thus the quantity produced too ( low ,…