1 Which of the following is likely to create inefficiency in

1) Which of the following is likely to create inefficiency in a market?
      
Small number of buyers
      
Homogeneous products
      
Very low entry barriers
      
Large number of sellers
2) Anti-trust laws empower the government to:
      
deal with free-rider problems.
      
market public goods to substitute private goods.
      
raise the market price to a minimum prescribed level.
  
prevent the emergence of tight oligopolies.

3) In a natural monopoly:
      
the marginal costs of production are low.
      
the total costs are very low.
      
the average costs rise with increase in production.
      
the minimum efficient scale is very low.

4) The effects of market activity that fall on third parties outside the considerations of the buyer and seller is known as:
      
government failure.
      
adverse selection.
      
deadweight loss.
  
externalities.

5) According to Ronald Coase, the problem of externalities is created by:
      
lack of government intervention.
      
inadequate property rights.
      
excess market demand.
      
high marginal costs of production.

6) A public good is defined as a product that is:
      
consumed in a Pareto inefficient manner.
      
produced by firms that are subsidized by the government at a loss.
      
consumed by a limited number of people.
  
consumed by one individual without denying others of its benefits.

7) The issue of _____ corresponds to whether the distribution of goods and services to individuals and the profits to firms is fair.
      
government intervention in the market
      
efficiency
      
equity
      
cost reduction

Solution

Large number of sellers might lead to overproduction of good which leads to market inefficiency. prevent the emergence of tight oligopolies. Anti-trust laws are a collection of federal and state government laws that aim to regulate the conduct and organization of market, generally to promote fair competition for the benefit of consumers. the minimum efficient scale is very low. Minimum efficient scale is the lowest scale necessary to achieve the economies of scale which lead to decrease in cost of procuction and helps to operate efficiently and competitively. externalities. These are the things which are neither accounted in revenue nor cost of production.