Sophisticated Economics Welfare Economics Test - 85+ MCQs: Welfare Economics Quiz: Evaluate Your Understanding of Economic Well-being and Social Welfare

1. What role do 'public goods' play in welfare economics?

Encourage Monopoly Practices

Promote Consumption Inequality

Enhance Social Welfare

Discourage Government Intervention

2. Explain the concept of 'tâtonnement' in the context of general equilibrium theory in welfare economics.

Encouraging market interventions

Balancing supply and demand through trial and error

Maximizing individual profits

Minimizing consumer surplus

3. Explain the concept of 'ordinal utility' and its significance in welfare economics.

Measuring total utility

Ranking preferences without measuring differences in satisfaction

Assessing consumer surplus

Maximizing producer surplus

4. How does 'perfect competition' contribute to social welfare in welfare economics?

Promotes Monopolistic Practices

Leads to Inefficient Markets

Maximizes Producer Surplus

Enhances Overall Economic Efficiency

5. Explain the concept of 'externality internalization' and its significance for welfare economics.

Promoting externalities as beneficial

Addressing negative externalities through government intervention

Encouraging market failures

Maximizing producer surplus

6. What is the significance of 'market failure' in welfare economics?

Promotes Economic Efficiency

Encourages Monopoly Practices

Indicates a Lack of Government Intervention

Reflects a Situation Where Markets Don't Allocate Resources Efficiently

7. Discuss the impact of 'bounded rationality' on decision-making in welfare economics.

Maximizing individual profits

Encouraging monopolistic practices

Minimizing consumer surplus

Recognizing limitations in cognitive abilities when making decisions

8. How does 'government intervention' impact welfare economics?

Promotes Efficient Resource Allocation

Discourages Social Welfare

Leads to Monopolistic Practices

Can Improve Market Failures

9. Discuss the 'Laffer curve' and its implications for taxation and economic well-being.

Encouraging fair competition

Maximizing individual profits

Balancing economic efficiency with fairness

Relationship between tax rates, revenue, and economic activity

10. How do 'public goods' differ from 'private goods' in welfare economics?

Encourage Consumption Inequality

Promote Monopolistic Practices

Rivalry in Consumption

Non-Rivalry and Non-Excludability

Economics - Welfare Economics MCQ Test 5