Lesson 4.1.8.6
4.1.8.6 Market imperfections Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.8.6, Market imperfections: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
What exists when one party in a transaction possesses more information than the other?
- Perfect knowledge
- Moral hazard
- Asymmetric information
- Symmetric information
-
In market failure theory, what does the second-hand car market illustrate?
- Positive externalities
- Monopoly power
- Adverse selection
- Moral hazard
-
Taking greater risks after purchasing insurance is an example of which concept?
- Price discrimination
- Adverse selection
- Moral hazard
- Public good
-
Compared to perfect competition, how does a profit-maximising monopoly misallocate resources?
- Expands output
- Lowers prices
- Restricts output
- Maximises welfare
-
A monopoly sets price above marginal cost. What type of inefficiency does this cause?
- Dynamic inefficiency
- Productive inefficiency
- Allocative inefficiency
- X-inefficiency
-
What type of market failure occurs when workers cannot easily move regions or occupations?
- Factor immobility
- Public good problem
- Moral hazard
- Asymmetric information
-
Which of the following is a clear example of capital immobility?
- A cash deposit
- A specialised factory
- A company car
- A delivery van
-
Which of the following acts as a legal barrier to entry in a market?
- High demand
- A patent
- A subsidy
- Low fixed costs
-
A patient cannot judge whether a surgeon's proposed treatment is necessary. What market imperfection is this?
- Factor immobility
- Negative externality
- Asymmetric information
- Moral hazard
-
In a used-car market, what process leads to high-quality goods being driven out of sale?
- Factor immobility
- Adverse selection
- Regulatory capture
- Moral hazard
-
Which action would most effectively reduce a monopolist's market power?
- Subsidising output
- Lowering entry barriers
- Granting patents
- Increasing tariffs
-
Which benefit can allow a monopoly to achieve lower average costs than competitive firms?
- X-inefficiency
- Economies of scale
- Allocative efficiency
- Dynamic inefficiency
-
Which type of factor immobility directly causes structural unemployment?
- Productive efficiency
- Informational symmetry
- Geographical mobility
- Occupational immobility
-
What problem occurs when employers cannot accurately measure a job applicant's true productivity before hiring?
- Geographical immobility
- Asymmetric information
- Moral hazard
- Price discrimination
-
Compared to a competitive market, how does a profit-maximising monopolist alter output and price?
- Lower output, higher price
- Higher output, lower price
- Higher output, higher price
- Lower output, lower price
-
How can patents acting as barriers to entry benefit society overall?
- Encouraging innovation
- Lowering prices
- Eliminating risk
- Increasing consumer surplus
-
What term describes high-risk individuals being more likely to purchase insurance than low-risk individuals?
- Moral hazard
- Principal-agent problem
- Adverse selection
- Asymmetric knowledge
-
A monopolist charges £20 where marginal cost is £8. What is the percentage mark-up?
- 60 per cent
- 250 per cent
- 40 per cent
- 150 per cent
-
What is a major regional consequence of factor immobility following industrial decline?
- Allocative efficiency
- Persistent unemployment
- High labour mobility
- Equilibrium wages
-
Which market structure in privatised utilities causes market failure through high entry barriers?
- Monopsony
- Contestable market
- Natural monopoly
- Perfect competition
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