Question 1

Use the figure below to answer the following questions.
   
Figure 16.2.3
-Refer to Figure 16.2.3.In this market there is a marginal external

Accepted Answer

A) cost of $14 a tonne. 
B) cost of $12 a tonne. 
C) cost of $2 a tonne. 
D) benefit of $2 a tonne. 
E) benefit of $12 a tonne. 
A) cost of $14 a tonne. 
B) cost of $12 a tonne. 
C) cost of $2 a tonne. 
D) benefit of $2 a tonne. 
E) benefit of $12 a tonne. C

Question 2

A voucher can eliminate the deadweight loss and lead to an efficient outcome if the value of the voucher equals the ________ of the good.

Accepted Answer

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

Question 3

Means of coping with negative externalities include all of the following except

Accepted Answer

A) implementing abatement technology. 
B) patents. 
C) property rights. 
D) Pigovian taxes. 
E) cap-and-trade. 
A) implementing abatement technology. 
B) patents. 
C) property rights. 
D) Pigovian taxes. 
E) cap-and-trade. B

Question 4

Use the table below to answer the following questions.
Table 16.2.2
Chemical Fertilizer Market
  
-Refer to Table 16.2.2.Fertilizer has a marginal

Accepted Answer

A) external cost of $100 a tonne. 
B) social cost of $100 a tonne. 
C) external cost of $30 a tonne. 
D) private cost of $30 a tonne. 
E) external cost of $0. 
A) external cost of $100 a tonne. 
B) social cost of $100 a tonne. 
C) external cost of $30 a tonne. 
D) private cost of $30 a tonne. 
E) external cost of $0.

Question 5

Air pollution generated by a paper mill factory is an example of a

Accepted Answer

A) positive production externality. 
B) positive consumption externality. 
C) negative consumption externality. 
D) marginal external benefit. 
E) negative production externality. 
A) positive production externality. 
B) positive consumption externality. 
C) negative consumption externality. 
D) marginal external benefit. 
E) negative production externality.

Question 6

Use the figure below to answer the following questions.
   
Figure 16.3.2
-Refer to Figure 16.3.2.The figure shows the market for good B.Under public production, consumers pay ________ for each unit of B.

Accepted Answer

A) zero 
B) $1 
C) $2 
D) $3 
E) $4 
A) zero 
B) $1 
C) $2 
D) $3 
E) $4

Question 7

Choose the statement that is incorrect.

Accepted Answer

A) Firms that have a high marginal abatement cost sell pollution permits. 
B) A cap is an upper limit. 
C) A cap is a pollution quota. 
D) A government that uses cap-and-trade must first estimate the efficient quantity of pollution and set the overall cap at that level. 
E) The government solves the problem of allocating the cap by making an initial distribution of the cap across firms and allowing them to trade in a market for pollution permits. 
A) Firms that have a high marginal abatement cost sell pollution permits. 
B) A cap is an upper limit. 
C) A cap is a pollution quota. 
D) A government that uses cap-and-trade must first estimate the efficient quantity of pollution and set the overall cap at that level. 
E) The government solves the problem of allocating the cap by making an initial distribution of the cap across firms and allowing them to trade in a market for pollution permits.

Question 8

Use the figure below to answer the following questions.
   
Figure 16.2.1
-Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If the market is unregulated, then the price is

Accepted Answer

A) P₁. 
B) P₄. 
C) below P₁. 
D) P₂. 
E) P₃. 
A) P₁. 
B) P₄. 
C) below P₁. 
D) P₂. 
E) P₃.

Question 9

Use the figure below to answer the following questions.
   
Figure 16.3.3
-Refer to Figure 16.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.If society's external benefit from university graduates is $10,000 each, then the

Accepted Answer

A) marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B) marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C) marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D) marginal social benefit curve lies $10,000 above the private marginal benefit curve. 
E) marginal social benefit curve is horizontal. 
A) marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B) marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C) marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D) marginal social benefit curve lies $10,000 above the private marginal benefit curve. 
E) marginal social benefit curve is horizontal.

Question 10

When an additional unit of output is produced, the extra cost to society is the

Accepted Answer

A) average total cost. 
B) marginal social cost. 
C) marginal private cost. 
D) marginal external cost. 
E) marginal damage. 
A) average total cost. 
B) marginal social cost. 
C) marginal private cost. 
D) marginal external cost. 
E) marginal damage.

Question 11

Use the table below to answer the following questions.
Table 16.3.1
  
-Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.If production is left to the private market, the quantity produced is

Accepted Answer

A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units. 
E) 5 units. 
A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units. 
E) 5 units.

Question 12

Use the figure below to answer the following questions.
   
Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve.If production is left to the private market, then

Accepted Answer

A) the quantity produced is less than the efficient quantity. 
B) the quantity produced is greater than the efficient quantity. 
C) price is greater than marginal social benefit quantity. 
D) the marginal cost curve is horizontal. 
E) the quantity produced is zero. 
A) the quantity produced is less than the efficient quantity. 
B) the quantity produced is greater than the efficient quantity. 
C) price is greater than marginal social benefit quantity. 
D) the marginal cost curve is horizontal. 
E) the quantity produced is zero.

Question 13

In recent years, as provincial governments attempt to balance their budgets, they have increased tuition fees considerably.This increase will likely result in

Accepted Answer

A) more students. 
B) fewer students. 
C) underprovision of education compared to the efficient level. 
D) overprovision of education compared to the efficient level. 
E) B and C. 
A) more students. 
B) fewer students. 
C) underprovision of education compared to the efficient level. 
D) overprovision of education compared to the efficient level. 
E) B and C.

Question 14

Use the table below to answer the following questions.
Table 16.2.1
  
-Refer to Table 16.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.If the market is unregulated, the quantity produced is

Accepted Answer

A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units. 
E) 5 units. 
A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units. 
E) 5 units.

Question 15

Use the figure below to answer the following questions.
   
Figure 16.2.1
-Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If the market is unregulated, then at the equilibrium output the marginal social cost of production is

Accepted Answer

A) less than the marginal benefit to consumers. 
B) greater than the marginal benefit to consumers. 
C) equal to the marginal benefit to consumers. 
D) equal to the marginal private cost of production. 
E) less than the marginal private cost of production. 
A) less than the marginal benefit to consumers. 
B) greater than the marginal benefit to consumers. 
C) equal to the marginal benefit to consumers. 
D) equal to the marginal private cost of production. 
E) less than the marginal private cost of production.

Question 16

Use the figure below to answer the following questions.
   
Figure 16.2.3
-Refer to Figure 16.2.3.The unregulated outcome in the paper market is

Accepted Answer

A) a quantity of 40 tonnes and a price of $11 a tonne. 
B) a quantity of 40 tonnes and a price of $13 a tonne. 
C) a quantity of 50 tonnes and a price of $12 a tonne. 
D) a quantity of 50 tonnes and a price of $14 a tonne. 
E) a quantity of 60 tonnes and a price of $13 a tonne. 
A) a quantity of 40 tonnes and a price of $11 a tonne. 
B) a quantity of 40 tonnes and a price of $13 a tonne. 
C) a quantity of 50 tonnes and a price of $12 a tonne. 
D) a quantity of 50 tonnes and a price of $14 a tonne. 
E) a quantity of 60 tonnes and a price of $13 a tonne.

Question 17

Use the figure below to answer the following questions.
   
Figure 16.3.2
-Refer to Figure 16.3.2.The figure shows the market for good B.How many units of good B are produced and consumed in an unregulated market?

Accepted Answer

A) 0 units 
B) 3 units 
C) 5 units 
D) 6 units 
E) 9 units 
A) 0 units 
B) 3 units 
C) 5 units 
D) 6 units 
E) 9 units

Question 18

Use the table below to answer the following questions.
Table 16.3.1
  
-Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.If production is left to the private market, then

Accepted Answer

A) an efficient quantity is produced. 
B) imposing a tax leads to production of the efficient quantity. 
C) too much fertilizer is produced. 
D) a system of pollution permits leads to production of the efficient quantity. 
E) an inefficient quantity is produced. 
A) an efficient quantity is produced. 
B) imposing a tax leads to production of the efficient quantity. 
C) too much fertilizer is produced. 
D) a system of pollution permits leads to production of the efficient quantity. 
E) an inefficient quantity is produced.

Question 19

In the absence of government intervention, a profit-maximizing firm producing a good with an external cost will produce a quantity at which

Accepted Answer

A) price is greater than marginal private cost. 
B) price is less than marginal revenue. 
C) price is less than marginal private cost. 
D) price equals marginal private cost. 
E) marginal revenue equals marginal social cost. 
A) price is greater than marginal private cost. 
B) price is less than marginal revenue. 
C) price is less than marginal private cost. 
D) price equals marginal private cost. 
E) marginal revenue equals marginal social cost.

Question 20

A homeowner planting an attractive garden in front of his house creates ________. A bakery baking bread creates ________.

Accepted Answer

A) no externality; a positive production externality 
B) a positive consumption externality; no externality 
C) no externality; no externality 
D) a positive consumption externality; a positive production externality 
E) a positive production externality; no externality 
A) no externality; a positive production externality 
B) a positive consumption externality; no externality 
C) no externality; no externality 
D) a positive consumption externality; a positive production externality 
E) a positive production externality; no externality

Use the figure below to answer the following questions. Figure 16.2.3 -Refer to Figure 16.2.3.In this market there is a marginal external

A voucher can eliminate the deadweight loss and lead to an efficient outcome if the value of the voucher equals the ________ of the good.

Means of coping with negative externalities include all of the following except

Use the table below to answer the following questions. Table 16.2.2 Chemical Fertilizer Market -Refer to Table 16.2.2.Fertilizer has a marginal

Air pollution generated by a paper mill factory is an example of a

Use the figure below to answer the following questions. Figure 16.3.2 -Refer to Figure 16.3.2.The figure shows the market for good B.Under public production, consumers pay ________ for each unit of B.

Choose the statement that is incorrect.

Use the figure below to answer the following questions. Figure 16.2.1 -Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If the market is unregulated, then the price is

Use the figure below to answer the following questions. Figure 16.3.3 -Refer to Figure 16.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.If society's external benefit from university graduates is $10,000 each, then the

When an additional unit of output is produced, the extra cost to society is the

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve.If production is left to the private market, then

In recent years, as provincial governments attempt to balance their budgets, they have increased tuition fees considerably.This increase will likely result in

Use the figure below to answer the following questions. Figure 16.2.3 -Refer to Figure 16.2.3.The unregulated outcome in the paper market is

Use the figure below to answer the following questions. Figure 16.3.2 -Refer to Figure 16.3.2.The figure shows the market for good B.How many units of good B are produced and consumed in an unregulated market?

In the absence of government intervention, a profit-maximizing firm producing a good with an external cost will produce a quantity at which

A homeowner planting an attractive garden in front of his house creates . A bakery baking bread creates .

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

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 16: Externalities

Use the figure below to answer the following questions. Figure 16.2.3 -Refer to Figure 16.2.3.In this market there is a marginal external

A voucher can eliminate the deadweight loss and lead to an efficient outcome if the value of the voucher equals the ________ of the good.

Means of coping with negative externalities include all of the following except

Use the table below to answer the following questions. Table 16.2.2 Chemical Fertilizer Market -Refer to Table 16.2.2.Fertilizer has a marginal

Air pollution generated by a paper mill factory is an example of a

Use the figure below to answer the following questions. Figure 16.3.2 -Refer to Figure 16.3.2.The figure shows the market for good B.Under public production, consumers pay ________ for each unit of B.

Choose the statement that is incorrect.

Use the figure below to answer the following questions. Figure 16.2.1 -Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If the market is unregulated, then the price is

Use the figure below to answer the following questions. Figure 16.3.3 -Refer to Figure 16.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.If society's external benefit from university graduates is $10,000 each, then the

When an additional unit of output is produced, the extra cost to society is the

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve.If production is left to the private market, then

In recent years, as provincial governments attempt to balance their budgets, they have increased tuition fees considerably.This increase will likely result in

Use the figure below to answer the following questions. Figure 16.2.3 -Refer to Figure 16.2.3.The unregulated outcome in the paper market is

Use the figure below to answer the following questions. Figure 16.3.2 -Refer to Figure 16.3.2.The figure shows the market for good B.How many units of good B are produced and consumed in an unregulated market?

In the absence of government intervention, a profit-maximizing firm producing a good with an external cost will produce a quantity at which

A homeowner planting an attractive garden in front of his house creates ________. A bakery baking bread creates ________.

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

Public Goods and Common Resources

Markets for Factors of Production

Filters

A homeowner planting an attractive garden in front of his house creates . A bakery baking bread creates .