1. Education is a good example of a:

A) pure public good.

B) pure private good.

C) good that creates external benefits.

D) good that creates external costs.

2. When a talented student from a poor family is unable to receive a loan because she has no collateral, this _________ can be addressed by __________.

A) government failure; the privatization of education

B) government failure; the abolition of the federal Department of Education

C) credit market failure; the privatization of education

D) credit market failure; government intervention

3. Which is a moral hazard effect of Social Security?

A) Retirees die sooner than they would without Social Security.

B) Workers retire sooner than they would without Social Security.

C) Retirees buy less health insurance than they would without Social Security.

D) Workers work longer and become more unhealthy than they would without Social Security.