Market Failure - Important MCQs (CA Foundation Economics)
Market Failure - 50 Important MCQs (CA Foundation Economics)
1. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
2. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Answer: b) The allocation of resources is inefficient
3. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
4. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Market Failure - Important MCQs (CA Foundation Economics)
Answer: d) Non-excludable and non-rival
5. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Answer: b) Public goods
6. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Answer: c) A side effect of a transaction that affects others not involved in the transaction
7. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
8. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Market Failure - Important MCQs (CA Foundation Economics)
Answer: c) Perfect competition
9. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Answer: b) The allocation of resources is inefficient
10. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
11. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Answer: d) Non-excludable and non-rival
12. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) Public goods
13. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Answer: c) A side effect of a transaction that affects others not involved in the transaction
14. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
15. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
16. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) The allocation of resources is inefficient
17. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
18. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Answer: d) Non-excludable and non-rival
19. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Answer: b) Public goods
20. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Market Failure - Important MCQs (CA Foundation Economics)
Answer: c) A side effect of a transaction that affects others not involved in the transaction
21. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
22. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
23. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Answer: b) The allocation of resources is inefficient
24. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) Pollution from a factory
25. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Answer: d) Non-excludable and non-rival
26. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Answer: b) Public goods
27. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Answer: c) A side effect of a transaction that affects others not involved in the transaction
28. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) Overuse of common resources
29. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
30. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Answer: b) The allocation of resources is inefficient
31. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
32. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Market Failure - Important MCQs (CA Foundation Economics)
Answer: d) Non-excludable and non-rival
33. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Answer: b) Public goods
34. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Answer: c) A side effect of a transaction that affects others not involved in the transaction
35. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
36. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Market Failure - Important MCQs (CA Foundation Economics)
Answer: c) Perfect competition
37. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Answer: b) The allocation of resources is inefficient
38. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
39. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Answer: d) Non-excludable and non-rival
40. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) Public goods
41. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Answer: c) A side effect of a transaction that affects others not involved in the transaction
42. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
43. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
44. Market failure occurs when:
a) Prices are flexible
b) The allocation of resources is inefficient
c) Government intervenes in the market
d) There is full employment
Market Failure - Important MCQs (CA Foundation Economics)
Answer: b) The allocation of resources is inefficient
45. An example of a negative externality is:
a) Free education
b) Pollution from a factory
c) Vaccination
d) National defense
Answer: b) Pollution from a factory
46. Public goods are:
a) Excludable and rival
b) Excludable and non-rival
c) Non-excludable and rival
d) Non-excludable and non-rival
Answer: d) Non-excludable and non-rival
47. The free rider problem is associated with:
a) Private goods
b) Public goods
c) Common resources
d) Club goods
Answer: b) Public goods
48. Which of the following best describes an externality?
a) A benefit or cost that affects only producers
b) A cost that affects only consumers
c) A side effect of a transaction that affects others not involved in the transaction
d) A type of taxation policy
Market Failure - Important MCQs (CA Foundation Economics)
Answer: c) A side effect of a transaction that affects others not involved in the transaction
49. The tragedy of the commons refers to:
a) Underconsumption of public goods
b) Overuse of common resources
c) Government failure
d) Private monopolies
Answer: b) Overuse of common resources
50. Which of the following is not a cause of market failure?
a) Externalities
b) Public goods
c) Perfect competition
d) Monopoly
Answer: c) Perfect competition
