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1) There are several bridges along highway 280 which are free to ride on

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1) There are several bridges along highway 280 which are free to ride on. This bridge was built and is being maintained by the government... not the "free" market. Let's think about why that is the case... The economic logic of government ownership and having a marginal price of 0 (that is, it is free to cross the bridge) is:

A.Bridges are public goods because they are non-excludable and non-rival.

B.The owner of the bridge has a natural monopoly and the marginal cost of production (letting another car drive across it) is close to zero.

C.Only the government can be trusted to build a sophisticated structure such as a bridge.

D. There is no justification for government intervention here. This should be left to the free market.

2. This question is based on The Economist Magazine's Schools Brief: State and Market - which has its own module in Etudes Government intervention to correct a market failure:

A.faces the problem of the regulators being captured by the industry they are regulating

B.has diminished in recent years - which is a bad thing

C.has diminished in recent years - which is a good thing.

D. has become more important as the damage of market failures has risen

3. This question is based on The Economist Magazine's Schools Brief: State and Market - which has its own module in Etudes In general the fundamental argument regarding market failures is that

A.the most damaging market failure is that of negative externality .. but the others are less damaging than assumed.

B.the market often corrects the failures more efficiently than the government can when they intervene

C.there really are no market failures in practice

D. the growing problems of market failure requires a further government effort to take corrective actions