Cocoa farmers in the hypothetical countfiv;zktzfw8 fksb;/u (d384lry of Chocolattia face extreme poverty, earning less than a dollar a day. Deforestation caused 3tiwu;88l k(k 4vz;dfsz/fbfby cocoa production poses environmental risks, with around 40%
of land dedicated to cocoa, resulting in the loss of native forests. Supply chain transparency is lacking, including issues of drug trafficking and child slavery.
Referring to the scenario above, which of the following statements are true?

I. The native forests are a common pool resource and the deforestation is a corresponding tragedy of the commons
II. The poverty of farmers, deforestation, drug trafficking and child slavery are all examples of market failure
III. Cocoa is a demerit good generating negative externalities of consumption

  Subsidies play a crucnv8 aua+c 35o)ccx2 -hwjm)g6m *f tsnial role in making healthcare more accessible and affordable. For example, if a country’s government enacted legislation introducing subsidies to help lower-income individuals and families afford health insurance coverage, these subsidies would expand healthcare access and reduce tf-wc*a+ c)5so2nngmj x 6vt)8 au3 cmhhe uninsured rate, particularly for vulnerable populations.
Subsidies are a form of government intervention designed to_____consumption of health care and health insurance because they are both examples of_____goods that generate_____externalities of consumption.

  Defense and security are both______and ______, and are classic examples of __s *fd 9 ejx6sa.: 3znu(zyx1i;xh sm3k___goods provsa(in6sm3h;xzz:uyd j 1.x*3fke9xs ided by governments. Military forces protect a nation's citizens and their interests, regardless of individuals' contributions to defense funding.

  Some professions and industries require individuals or businesses to ob t:6gq.i( ng(lnwh) xmtain licenses or certifications to ensure they meet certain standards. For example, medical doctors must be licensed, and certain trades may require certifica g. )6 ingm:(th(wnqlxtion.
Based on the statement above, which of the following statements about these licenses or certifications is not true?

  Governments invest in the construction and maintenance ofv a t1jv: 8x*xczcpq0; infrastructure such as roads, bridges, and public transportation systems. These projects improve mobility and facilitate economic activities for the entire population. For instance, the interstate highway systeq0 1;c: jv*zpa8 xxtvcm in the United States connects people across states and enables the efficient movement of goods and services.
Based on the scenario above, which of the following statements are true?

I. Infrastructure such as roads, bridges and public transportation systems generate positive production externalities.
II. Government investment in infrastructure projects is an example of direct provision by the public sector.
III. In the absence of government intervention, infrastructure projects are likely to be over provided by the free market.

  An insurance company offers a new health insurance plan that inadvertent.b*p)z9 cjzjg 9 vuk8ily attracts a dis.bvz) 98ckzgujip *j 9proportionate number of individuals with pre-existing medical conditions.
This is an example of what problem associated with asymmetric information?

  Cocoa farmers in the hypothetical countrywm2lw wo99y+urw 5;ly of Chocolattia face extreme poverty, earning less than a dollar a day. Deforestation cause wl9woy wuy2r5l ;mw+9d by cocoa production poses environmental risks, with around 40% of land dedicated to cocoa, resulting in the loss of native forests. The supply chain includes issues with drug trafficking and child slavery. Chocolate is a product that uses cocoa as an input.
Referring to the scenario above, which of the following forms of government intervention will not correct this market failure?

  Due to their non-excludable and non-rivalr8 iv23cepii 3tous nature, public goods will not be provided by the free market. Therefore the government has to either directly provide those goods, or contract their pi c32ei iv3t8provision out to the private sector.

Based on the statement above, which of the following is least likely to be true?

  
Using the diagram above, determine the equilibrium price, the socially optimum output, and the size of the negative externality.

	Equilibrium price	Socially optimum output	Size of negative externality
A.	$4	350 000 kg	$0.5
B.	$3.5	300 000 kg	$0.5
C.	$3.5	300 000 kg	$1
D.	$4	300 000 kg	$1

  
Using the diagram above, calculate the size of the welfare loss and the total cost of the subsidy that the government should provide so that the market will achieve allocative efficiency.

	Size of welfare loss	Total cost of subsidy
A.	$ 200 000	$1 400 000
B.	$ 200 000	$ 1 200 000
C.	$ 100 000	$ 1 200 000
D.	$ 100 000	$ 1 400 000

  
Using the diagram above, calculate the size of an indirect tax that would eliminate the externality, the total tax revenue that the government would collect, and the resulting equilibrium quantity after the imposition of the tax.

	Size of indirect tax per unit	Total tax revenue	Quantity bought and sold after tax
A.	$2	$ 1 400 000	700 000 unites
B.	$2	$ 1 200 000	600 000 units
C.	$1	$ 1 200 000	600 000 units
D.	$1	$ 1 400 000	700 000 units