34. There are two polar approaches to guiding development, the market approach and the planning approach. Theoretically, a. a key strength of the market approach is that it promotes dynamic efficiency, while a key strength of the planning approach is that it promotes static efficiency. b. a key strength of the market approach is that it promotes dynamic efficiency, while a key strength of the planning approach is that it can quickly be adapted in the face of external shocks. c. a key strength of the market approach is that it is flexible and adapts quickly to take into account external shocks, while a key strength of the planning approach is that it can avoid market failures. d. a key strength of the market approach is that there are no market failures, while there are inevitably planning failures.35. Which of the following is not a source of market failures in a market system?a. difficulties inducing worker effortb. imperfect property rightsc. inadequate legal systemd. imperfect competition36. Monopoliesa. produce the efficient amount of output from societyâ€™s perspective.b. produce too much output from societyâ€™s perspective.c. produce to little output from societyâ€™s perspective.d. produce too little output from societyâ€™s perspective, but shift the distribution of income towards consumers.37. Which of the following would induce a monopoly to produce the efficient level of output?a. eliminate tariffs and quotas on competing imports.b. impose a tariff on competing imports.c. use quotas to restrict competing imports.d. impose a profits tax on monopolists. 38. Low income countries are prone to monopolies because markets are thin. This meansa. those in low income countries who can purchase products tend to be underweightb. markets only exist in a few large cities that align along a thin north south axis of the countryc. for many products, the level of market demand is only sufficient to support one firm producing at minimum efficient scale.d. markets are fragmented so the costs of production tend to be high.39. When there are external economies,a. too much output is produced relative to the level that is socially efficient.b. too little output is produced relative to the level that is socially efficient.c. third parties are harmed by the production of the product.d. third parties are harmed by the consumption of the product.40. When there are external economies, markets can be induced to produce the socially efficient output level bya. imposing a tax on producersb. imposing a tax on consumersc. providing a subsidy to either producers or consumersd. none of the above41. When there are external diseconomiesa. too much output is produced relative to the level that is socially efficientb. too little output is produced relative to the level that is socially efficientc. providing a subsidy to either producers or consumers can induce markets to produce the socially efficient level of outputd. third parties benefit from the production of the product, but not from the consumption of the product.42. Some examples of external economies in developing countries include all of the following EXCEPT:a. firm investments in technology that cannot be fully protected by patent rightsb. firm training of labor in skills that are also useful in producing other productsc. environmental investments such as terracingd. the tragedy of the commons43. In the case of public goods,a. too little output is produced relative to the level that is socially efficient.b. too much output is produced relative to the level that is socially efficientc. too much is consumed relative to the socially efficient leveld. the efficient amount is consumed, but too much is produced so that there is a surplus of the good.44. The two defining characteristics of public goods are that they are:a. non-rival in production, but rival in consumption.b. non-rival in consumption, and excludablec. non-rival in consumption and non-excludabled. rival in consumption but prone to the free rider problem.45. An example of the kind of conflict between static and dynamic efficiency observed in many developing countries is:a. when credit markets are fragmented, poor people invest too little in education.b. the persistence of sharecroppingc. insufficient investment in roadsd. the infant industry problem
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