Question 1

Explain the difference between a positive production externality and a positive consumption externality.

Accepted Answer

A positive production externality occurs when a firm produces a good and that production provides benefits to parties other than the firm.A positive consumption externality occurs when a person consumes a good and that consumption provides benefits to others who did not consume the good.

Question 2

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC).
-Using the figure above,suppose a subsidy of $15,000 per student is provided to private colleges.Then,the market equilibrium occurs at a tuition of ________ a year and ________ million students.

Accepted Answer

A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20 
A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20 A

Question 3

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $0 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $0 B

Question 4

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Accepted Answer

A)  the marginal cost. 
B)  represented by the demand curve. 
C)  represented by the supply curve. 
D)  the marginal external cost. 
E)  the marginal social cost. 
A)  the marginal cost. 
B)  represented by the demand curve. 
C)  represented by the supply curve. 
D)  the marginal external cost. 
E)  the marginal social cost.

Question 5

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

Accepted Answer

A)  marginal private benefit 
B)  marginal external benefit 
C)  marginal social benefit 
D)  marginal social cost 
E)  marginal external cost 
A)  marginal private benefit 
B)  marginal external benefit 
C)  marginal social benefit 
D)  marginal social cost 
E)  marginal external cost

Question 6

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

Accepted Answer

A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward. 
A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward.

Question 7

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

Accepted Answer

While many people might like to see a mi

Question 8

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

Accepted Answer

Education creates an external benefit.He

Question 9

A government subsidy paid to a firm
i.increases the demand for the good.
ii.has no effect on the supply of the good.
iii.leads to an increase in the equilibrium quantity.

Accepted Answer

A)  i only 
B)  i and ii 
C)  ii only 
D)  iii only 
E)  i and iii 
A)  i only 
B)  i and ii 
C)  ii only 
D)  iii only 
E)  i and iii

Question 10

The use of vouchers for education

Accepted Answer

A)  decreases the demand for education and increases the equilibrium quantity. 
B)  increases the demand for education and increases the equilibrium quantity. 
C)  increases the deadweight loss for those who can't afford schooling. 
D)  decreases the quantity provided to the efficient level. 
E)  decreases the demand for education and decreases the equilibrium quantity. 
A)  decreases the demand for education and increases the equilibrium quantity. 
B)  increases the demand for education and increases the equilibrium quantity. 
C)  increases the deadweight loss for those who can't afford schooling. 
D)  decreases the quantity provided to the efficient level. 
E)  decreases the demand for education and decreases the equilibrium quantity.

Question 11

Some policymakers have proposed giving parents of children in poorly performing schools tax dollars to help send their children to private schools.This proposal is an example of

Accepted Answer

A)  vouchers. 
B)  public provision. 
C)  external costs. 
D)  taxes. 
E)  correcting an externality using a government good. 
A)  vouchers. 
B)  public provision. 
C)  external costs. 
D)  taxes. 
E)  correcting an externality using a government good.

Question 12

Which of the following is true?

Accepted Answer

A)  MSC = MC + Marginal external cost 
B)  MC = Marginal external cost - MSC 
C)  MC = Marginal external benefit + MSC 
D)  MSC = Marginal external cost + marginal external benefit 
E)  MSC = Marginal external cost - marginal external benefit 
A)  MSC = MC + Marginal external cost 
B)  MC = Marginal external cost - MSC 
C)  MC = Marginal external benefit + MSC 
D)  MSC = Marginal external cost + marginal external benefit 
E)  MSC = Marginal external cost - marginal external benefit

Question 13

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals ________ and marginal external benefit equals ________.

Accepted Answer

A)  $200; $150 
B)  $350; $200 
C)  $200; $50 
D)  $350; $150 
E)  $150; $250 
A)  $200; $150 
B)  $350; $200 
C)  $200; $50 
D)  $350; $150 
E)  $150; $250

Question 14

Marginal social cost is equal to

Accepted Answer

A)  the amount people who buy a product pay for another unit. 
B)  whatever producers have to pay to produce output. 
C)  the sum of marginal private cost and the marginal external cost. 
D)  the average of marginal private cost and the marginal external cost. 
E)  None of the above answers is correct. 
A)  the amount people who buy a product pay for another unit. 
B)  whatever producers have to pay to produce output. 
C)  the sum of marginal private cost and the marginal external cost. 
D)  the average of marginal private cost and the marginal external cost. 
E)  None of the above answers is correct.

Question 15

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 200 billion kilowatt hours are produced is

Accepted Answer

A)  0¢ per kilowatt. 
B)  10¢ per kilowatt. 
C)  20¢ per kilowatt. 
D)  15¢ per kilowatt. 
E)  5¢ per kilowatt. 
A)  0¢ per kilowatt. 
B)  10¢ per kilowatt. 
C)  20¢ per kilowatt. 
D)  15¢ per kilowatt. 
E)  5¢ per kilowatt.

Question 16

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

Accepted Answer

The three methods are pollution limits,p

Question 17

The marginal cost of production that is borne by the entire society is called the marginal

Accepted Answer

A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost. 
A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost.

Question 18

If all education in the United States were provided by private,tuition-charging schools,

Accepted Answer

A)  too much education would be consumed. 
B)  too little education would be consumed. 
C)  the efficient level of education would be provided. 
D)  the government would provide both students and schools with vouchers. 
E)  education would no longer have an external benefit. 
A)  too much education would be consumed. 
B)  too little education would be consumed. 
C)  the efficient level of education would be provided. 
D)  the government would provide both students and schools with vouchers. 
E)  education would no longer have an external benefit.

Question 19

Why is it not efficient to eliminate all pollution?

Accepted Answer

Eliminating pollution is a task that use

Question 20

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

Accepted Answer

A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons. 
A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons.

Explain the difference between a positive production externality and a positive consumption externality.

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

The cost of producing an additional unit of a good or service that falls on people other than the producer is

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

A government subsidy paid to a firm i.increases the demand for the good. ii.has no effect on the supply of the good. iii.leads to an increase in the equilibrium quantity.

The use of vouchers for education

Some policymakers have proposed giving parents of children in poorly performing schools tax dollars to help send their children to private schools.This proposal is an example of

Which of the following is true?

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals and marginal external benefit equals .

Marginal social cost is equal to

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 200 billion kilowatt hours are produced is

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

The marginal cost of production that is borne by the entire society is called the marginal

If all education in the United States were provided by private,tuition-charging schools,

Why is it not efficient to eliminate all pollution?

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Externalities

Explain the difference between a positive production externality and a positive consumption externality.

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

The cost of producing an additional unit of a good or service that falls on people other than the producer is

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

A government subsidy paid to a firm i.increases the demand for the good. ii.has no effect on the supply of the good. iii.leads to an increase in the equilibrium quantity.

The use of vouchers for education

Some policymakers have proposed giving parents of children in poorly performing schools tax dollars to help send their children to private schools.This proposal is an example of

Which of the following is true?

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals ________ and marginal external benefit equals ________.

Marginal social cost is equal to

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 200 billion kilowatt hours are produced is

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

The marginal cost of production that is borne by the entire society is called the marginal

If all education in the United States were provided by private,tuition-charging schools,

Why is it not efficient to eliminate all pollution?

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals and marginal external benefit equals .