Holt 7525-9 S15_IT

___ 14. The tragedy of the commons can be solved by:
a. turning the good into a public good
b. government regulation or taxation to prevent overconsumption
c. Both of the above
d. Neither of the above
___ 15. Jerolyn signs up for a computer dating service. She finds that a lot of the men who send
her emails are, in her opinion, “computer nerds”. This is an example of:
a. Moral hazard
b. Adverse selection
c. Both of the above
d. Neither of the above
___ 16. Jerolyn finally meets a caring, considerate, hard working man through the computer
dating service. Soon after they marry, he becomes uncaring, inconsiderate, and lazy.
This is an example of:
a. Moral hazard
b. Adverse selection
c. Both of the above
d. Neither of the above
___ 17. Consumers:
a. usually have less information about a product than the seller
b. usually can gain more information if they are willing to pay the cost of obtaining the
additional information
c. Both of the above
d. Neither of the above
Problems:
1. Explain why the economically efficient level of pollution is usually not zero.
2. Explain the difference between a rivalrous good and a nonrivalrous good and give an example
of each.
3. Explain why a private market will not produce public goods.
FOR REVIEW ONLY - NOT FOR DISTRIBUTION
Market Failure 27 - 14