Question 1

Public goods are those for which

Accepted Answer

A)  individuals who do not pay can be excluded from consuming the good. 
B)  individuals who do not pay cannot be excluded from consuming the good. 
C)  external costs exist. 
D)  no external costs exist. 
A)  individuals who do not pay can be excluded from consuming the good. 
B)  individuals who do not pay cannot be excluded from consuming the good. 
C)  external costs exist. 
D)  no external costs exist.

Question 2

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal social benefit is

Accepted Answer

A)  zero. 
B)  $14,000. 
C)  $19,000. 
D)  $16,000. 
A)  zero. 
B)  $14,000. 
C)  $19,000. 
D)  $16,000.

Question 3

-Vaccinations provide both private benefits and external benefits. The table above gives information on the marginal private benefit and marginal external benefit associated with vaccination against varicella (chicken pox).The marginal social benefit of the 4 millionth varicella vaccination is

Accepted Answer

A)  $6. 
B)  $12. 
C)  $48. 
D)  $2. 
A)  $6. 
B)  $12. 
C)  $48. 
D)  $2.

Question 4

A good or service or a resource is excludable if

Accepted Answer

A)  it is possible to prevent someone from enjoying its benefits. 
B)  it is not possible to prevent someone from enjoying its benefits. 
C)  its use by one person decreases the quantity available for someone else. 
D)  its use by one person does not decrease the quantity available for someone else. 
A)  it is possible to prevent someone from enjoying its benefits. 
B)  it is not possible to prevent someone from enjoying its benefits. 
C)  its use by one person decreases the quantity available for someone else. 
D)  its use by one person does not decrease the quantity available for someone else.

Question 5

Michigan Radio is the state's most listened-to public radio service, attracting approximately 400,000 listeners each week and is funded through listener donations. Listeners can access Sirius satellite radio through a subscription to the service. Michigan Radio is a ________ and Sirius satellite radio is a ________.

Accepted Answer

A)  common resource; natural monopoly 
B)  public good; natural monopoly 
C)  natural monopoly; private good 
D)  public good; common resource 
A)  common resource; natural monopoly 
B)  public good; natural monopoly 
C)  natural monopoly; private good 
D)  public good; common resource

Question 6

Public goods are I. nonexcludable.
II) nonrival.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 7

Which of the following episodes would most likely contain an externality?

Accepted Answer

A)  You cannot afford to buy groceries. 
B)  You decide to grow your own vegetables in your backyard where no one else can see them. 
C)  You decide to grow flowers in your front yard where everyone else can see them. 
D)  You eat all the vegetables you grow yourself. 
A)  You cannot afford to buy groceries. 
B)  You decide to grow your own vegetables in your backyard where no one else can see them. 
C)  You decide to grow flowers in your front yard where everyone else can see them. 
D)  You eat all the vegetables you grow yourself.

Question 8

A government subsidy for a good

Accepted Answer

A)  is similar to a tax insofar as it decreases the production of the good being subsidized. 
B)  increases production of the subsidized goods. 
C)  punishes those who consume or produce the subsidized good. 
D)  has no effect on the quantity of the good produced. 
A)  is similar to a tax insofar as it decreases the production of the good being subsidized. 
B)  increases production of the subsidized goods. 
C)  punishes those who consume or produce the subsidized good. 
D)  has no effect on the quantity of the good produced.

Question 9

-The table above gives the marginal social cost (which equals the price), marginal private benefit, and marginal social benefit of students attending Diablo Valley College (DVC) in Concord, California.
a) When 4,500 students attend DVC, what does the marginal external benefit equal?
b) If the market is competitive and left without government intervention, what is the quantity of students that will attend DVC and what will be the price of a course?
c) What is the efficient quantity of students attending DVC?
d) If the government can set the price per course, in order to have the efficient quantity of students attending DVC, what should the government set as the price?

Accepted Answer

a) The marginal external benefit equals

Question 10

One way that government can increase the production of goods that have external benefits is to

Accepted Answer

A)  tax the activity. 
B)  subsidize the activity. 
C)  use marketable permits. 
D)  Both answers B and C are correct 
A)  tax the activity. 
B)  subsidize the activity. 
C)  use marketable permits. 
D)  Both answers B and C are correct

Question 11

-In the above figure, if the market is competitive and unregulated, then at the equilibrium amount of output the marginal social benefit is

Accepted Answer

A)  less than the marginal cost to producers. 
B)  greater than the marginal social cost. 
C)  equal to the marginal cost to producers. 
D)  equal to the marginal private benefit from consumption. 
A)  less than the marginal cost to producers. 
B)  greater than the marginal social cost. 
C)  equal to the marginal cost to producers. 
D)  equal to the marginal private benefit from consumption.

Question 12

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is incorrect. Ed

Question 13

A free rider is someone who

Accepted Answer

A)  creates an external benefit. 
B)  is irrational. 
C)  consumes only the goods he or she pays for. 
D)  enjoys the benefits of a good without paying for it. 
A)  creates an external benefit. 
B)  is irrational. 
C)  consumes only the goods he or she pays for. 
D)  enjoys the benefits of a good without paying for it.

Question 14

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal external benefit is

Accepted Answer

A)  zero. 
B)  $5,000. 
C)  $4,000. 
D)  $8,000. 
A)  zero. 
B)  $5,000. 
C)  $4,000. 
D)  $8,000.

Question 15

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. Suppose Inland's government is considering subsidizing private colleges to ensure the efficient level of enrollment. What should be the amount of the subsidy (if any)?

Accepted Answer

A)  The government should not subsidize private colleges. 
B)  $2,000 per student per year 
C)  $1,000 per student per year 
D)  $4,000 per student per year 
A)  The government should not subsidize private colleges. 
B)  $2,000 per student per year 
C)  $1,000 per student per year 
D)  $4,000 per student per year

Question 16

Which of the following is the BEST example of a private good?

Accepted Answer

A)  a can of Mountain Dew 
B)  fish in the ocean 
C)  cable television 
D)  national defense 
A)  a can of Mountain Dew 
B)  fish in the ocean 
C)  cable television 
D)  national defense

Question 17

-In the above figure, if the market is competitive and unregulated, the price will be

Accepted Answer

A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit. 
A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit.

Question 18

A political equilibrium can never be reached without voters, firms, politicians and ________.

Accepted Answer

A)  bureaucrats 
B)  public costs 
C)  indifference curves 
D)  market prices 
A)  bureaucrats 
B)  public costs 
C)  indifference curves 
D)  market prices

Question 19

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $95, the efficient quantity of satellites is

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  3. 
A)  0. 
B)  1. 
C)  2. 
D)  3.

Question 20

An example of a public good is national defense services.

Accepted Answer

A) True 
 B)False

Exam 16: Public Choices and Public Goods

Public goods are those for which

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal social benefit is

-Vaccinations provide both private benefits and external benefits. The table above gives information on the marginal private benefit and marginal external benefit associated with vaccination against varicella (chicken pox).The marginal social benefit of the 4 millionth varicella vaccination is

A good or service or a resource is excludable if

Public goods are I. nonexcludable. II) nonrival.

Which of the following episodes would most likely contain an externality?

A government subsidy for a good

One way that government can increase the production of goods that have external benefits is to

-In the above figure, if the market is competitive and unregulated, then at the equilibrium amount of output the marginal social benefit is

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

A free rider is someone who

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal external benefit is

Which of the following is the BEST example of a private good?

-In the above figure, if the market is competitive and unregulated, the price will be

A political equilibrium can never be reached without voters, firms, politicians and ________.

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $95, the efficient quantity of satellites is

An example of a public good is national defense services.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

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