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Chapter 6: Markets, Power, and Industry Cases Quiz

Test your understanding of leverage points, market failures, power dynamics, and industry resistance tactics.

1. According to Donella Meadows, what is a leverage point?

  1. A physical location where levers are stored
  2. A place in a system where a small change can produce large effects
  3. A mathematical calculation of force and distance
  4. A financial term for borrowed capital
Show Answer

The correct answer is B. A leverage point is a place in a system where a small, well-focused intervention can produce large, systemic effects. Meadows identified 12 such points, ranked from least to most powerful, providing a framework for strategic intervention design.

Concept Tested: Leverage Points

See: Donella Meadows' 12 Leverage Points

2. Which leverage level involves changing the shared beliefs and assumptions that create the system?

  1. Level 12: Constants, Numbers, Subsidies
  2. Level 8: Information Flows
  3. Level 7: Rules of the System
  4. Level 4: Mental Models and Paradigms
Show Answer

The correct answer is D. Level 4 (Mental Models and Paradigms) involves changing the shared beliefs and assumptions that create the system. This is one of the deepest and most powerful leverage points—when paradigms shift, everything built on them shifts too.

Concept Tested: Paradigm Interventions

See: Level 4: Mental Models and Paradigms

3. What is regulatory capture?

  1. When regulators capture criminals
  2. When regulatory agencies become dominated by the industries they're supposed to regulate
  3. When regulations capture market share
  4. When companies comply with all regulations
Show Answer

The correct answer is B. Regulatory capture occurs when regulatory agencies, created to protect the public, become dominated by the industries they're supposed to regulate. This happens through lobbying, revolving door employment, and industry funding, resulting in regulations that serve industry interests over public interests.

Concept Tested: Regulatory Capture

See: Regulatory Capture: When the Cops Work for the Robbers

4. What is an externality in economics?

  1. A cost that's included in the market price
  2. A benefit or cost affecting parties not directly involved in a transaction
  3. An external audit of company finances
  4. A foreign investment in domestic markets
Show Answer

The correct answer is B. An externality is a cost or benefit that affects parties not directly involved in a transaction. Pollution is a classic negative externality—the producer gains benefits while third parties bear costs (health problems, environmental damage) without compensation.

Concept Tested: Externalities

See: Externalities: Costs Someone Else Pays

5. What is "manufactured doubt"?

  1. Genuine scientific uncertainty about research findings
  2. A deliberate industry tactic to create confusion about scientific consensus
  3. Doubt that occurs naturally during research
  4. Uncertainty manufactured by scientists
Show Answer

The correct answer is B. "Manufactured doubt" is a deliberate industry tactic to create confusion about scientific consensus. Industries like tobacco and fossil fuels have used this to delay action by claiming "the science isn't settled" when it actually is.

Concept Tested: Manufactured Doubt

See: The Tactics of Industry Resistance

6. In game theory, what is a Nash Equilibrium?

  1. A perfectly balanced budget
  2. A stable state where no player can improve their outcome by unilaterally changing strategy
  3. An agreement between all industry players
  4. The optimal outcome for society
Show Answer

The correct answer is B. A Nash Equilibrium is a stable state where no player can improve their outcome by unilaterally changing strategy—even if that stable point is terrible for everyone. In prisoner's dilemma situations, mutual defection is often a Nash equilibrium even though mutual cooperation would be better for all.

Concept Tested: Nash Equilibrium

See: Game Theory Perspective

7. What is "astroturfing"?

  1. Installing artificial turf on sports fields
  2. Creating fake grassroots organizations that appear to be citizen-led but are actually industry-funded
  3. A method of organic farming
  4. Authentic grassroots organizing
Show Answer

The correct answer is B. Astroturfing is creating fake "grassroots" organizations that appear to be citizen-led but are actually funded and directed by industry. The term comes from "AstroTurf" (artificial grass)—it looks like grassroots but isn't real.

Concept Tested: Astroturfing

See: Front Groups and Astroturfing

8. According to the chapter, why are Level 8 (Information Flow) interventions powerful against industries that rely on information asymmetry?

  1. They are the easiest interventions to implement
  2. They directly attack the business model by making hidden information available to those harmed by its absence
  3. They always succeed without resistance
  4. They require no resources to implement
Show Answer

The correct answer is B. Information flow interventions (Level 8) are powerful against industries that rely on information asymmetry because they directly attack the business model. When hidden information (about risks, harms, or practices) becomes available to consumers, workers, or regulators, decision-making changes dramatically.

Concept Tested: Information Flow Interventions

See: Level 8: Information Flows

9. What made the tobacco control movement successful, according to the chapter?

  1. It focused on a single leverage point
  2. It combined interventions at multiple leverage levels simultaneously
  3. It relied solely on brute force bans
  4. It avoided confronting the tobacco industry
Show Answer

The correct answer is B. The tobacco control movement succeeded by combining interventions at multiple leverage levels simultaneously: information disclosure (Level 8), advertising bans and taxation (Level 7), settlement agreements (Level 6), and cultural paradigm shift from "glamorous" to "deadly" (Level 4).

Concept Tested: Multi-Level Intervention Strategy

See: Case Study 1: Tobacco Industry

10. What is the "revolving door" in the context of regulatory capture?

  1. A type of entrance used in government buildings
  2. The movement of personnel between regulatory agencies and the industries they regulate
  3. A policy that rotates regulations annually
  4. An automatic door detection system
Show Answer

The correct answer is B. The "revolving door" describes the movement of personnel between regulatory agencies and the industries they regulate—regulators leave for lucrative industry jobs, and industry executives become regulators. This creates relationships, obligations, and culture that can compromise regulatory independence.

Concept Tested: Revolving Door

See: The Revolving Door

11. What is the primary limitation of Level 12 interventions (constants, numbers, subsidies)?

  1. They are illegal in most countries
  2. Numbers are symptoms not causes, so systems often find workarounds
  3. They always cause harm to innocent parties
  4. They require paradigm change first
Show Answer

The correct answer is B. Level 12 interventions (tweaking numbers like tax rates, subsidies, or caps) are low-leverage because numbers are symptoms, not causes. Change them, and the system often finds workarounds. Set a carbon price? Companies might just pass costs to consumers without changing behavior.

Concept Tested: Shallow Interventions

See: Level 12: Constants, Numbers, Subsidies

12. In stakeholder analysis, what does the "High Power, High Interest" quadrant represent?

  1. Stakeholders who can be ignored
  2. Key players who must be engaged closely and actively managed
  3. Potential allies with limited influence
  4. Context setters with minimal interest
Show Answer

The correct answer is B. Stakeholders in the "High Power, High Interest" quadrant are key players who can significantly influence outcomes and care deeply about the issue. They must be engaged closely and actively managed because they have both the ability and motivation to affect your success.

Concept Tested: Stakeholder Analysis

See: Stakeholder Analysis: Mapping the Players