1) What are the distinguishing characteristics of "public goods?" Give two examples of a public goods. Why are public goods difficult for markets to allocate efficiently?
2) What are the necessary conditions for economic efficiency? In what four situations might a market fail to achieve ideal economic efficiency?
3) What is market failure? If a market failure is present, does this imply that government intervention will lead to a more efficient allocation of resources? Why or why not?
4) "If there are problems with markets, government will generally be able to intervene and correct the situation. Is this statement true? Explain your response.
5) "Because government-operated firms do not have to make a profit, they can usually produce at a lower cost and charge a lower prices than privately owned enterprises." Evaluate this view.