AP Microeconomics Practice Test: Government and Public Sector: Market Failure, Rents, Externalities, Public Goods, Efficiency

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Question 5 questions

Time 6 minutes

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1. Which of the following is true about the pure public good?

2. If there is a negative externality associated with the production of a private good, which of the following is an action by government that would most likely move the market to an efficient outcome?

3. If there is a positive externality associated with the production of a private good, which of the following is an action of government that would most likely move the market to an efficient outcome?

4. For a polluting steel company, a government action to most likely achieve an optimal or efficient outcome would produce what effect on the market equilibrium price and output?

5. Which of the following is true?