The problem caused when people are often reluctant to voluntarily pay for goods and services that provide benefits for everyone, even for those who don't pay is called the:
A. free-rider problem.
B. moral hazard problem.
C. drop in the bucket hypothesis.
D. rational ignorance problem.
Answer: A
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A positive statement
A) must always be right. B) cannot be tested. C) might be right or wrong. D) depends on someone's value judgment. E) cannot be negative.
Governments can eliminate market failure due to an imperfectly competitive market by
A) changing the market structure, for example by eliminating monopoly protection. B) having the government own the monopoly. C) imposing regulations that reduce prices. D) All of the above.
Which of the following situations could generate a shortage?
A) Demand for a good increases, resulting in a new higher market clearing price. B) Demand for a good decreases, resulting in a new lower market clearing price. C) Demand for a good increases, but the price is not permitted to rise. D) Demand for a good decreases, but the price is not permitted to fall.
The Great Depression of the 1930s
a. confirmed the value of a "hands off" policy for governments. b. was exacerbated by an expansionary monetary policy. c. was a worldwide event. d. continued throughout the 1940s without any interruption.