Efficiency and Market Failure Quiz by Shubhrata Shrestha | Jun 27, 2025 | 0 comments Efficiency and Market Failure Quiz 1. What condition indicates allocative efficiency? A. P > MC B. P < AC C. P = MC D. P > MR None 2. Which of the following is a cause of market failure? A. Technological efficiency B. Externalities C. Increasing returns to scale D. Competitive pricing None 3. Productive efficiency is achieved when: A. Goods are produced at maximum cost B. Inputs are partially used C. Maximum output is produced at minimum cost D. Marginal cost exceeds marginal benefit None 4. Dynamic efficiency is best described as: A. Cost reduction through long-term innovation B. Price stability over time C. Short-run production cost minimization D. Maximization of producer surplus None 5. Which concept means no one can be made better off without making someone worse off? A. Technical efficiency B. Pareto optimality C. Monopoly efficiency D. Information symmetry None 6. Which of the following goods often leads to a missing market? A. Public goods B. Private goods C. Luxury goods D. Inferior goods None 7. Which of the following is not a cause of market failure? A. Externalities B. Information failure C. Market power D. Perfect competition None 8. Which equation defines Social Marginal Benefit (SMB)? A. SMB = PMB + EMB B. SMB = PMC - EMC C. SMB = MC + MU D. SMB = P + AVC None 9. Merit goods are under-consumed because: A. Consumers overvalue them B. Consumers lack perfect information C. They are too expensive to produce D. They have negative externalities None 10. Which of the following indicates the market is not productively efficient? A. Operating at the lowest AC B. Operating on the PPF C. Operating inside the PPF D. P = MC None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
