Question 1

A carbon tax which is designed to reduce pollution is an example of a

Accepted Answer

A) command-and-control policy. 
B) government administrative rule. 
C) noneffective incentive. 
D) market-based policy. 
A) command-and-control policy. 
B) government administrative rule. 
C) noneffective incentive. 
D) market-based policy.

Question 2

An external benefit is created when you pursue a college education.

Accepted Answer

A) True 
 B)False

Question 3

Overuse of a common resource may be avoided by all of the following methods except

Accepted Answer

A) charging for the use of a common resource. 
B) issuing tradable permits for the use of a common resource. 
C) government taking over ownership of all private common resources. 
D) setting quotas or legal limits on the quantity of the common resource consumed. 
A) charging for the use of a common resource. 
B) issuing tradable permits for the use of a common resource. 
C) government taking over ownership of all private common resources. 
D) setting quotas or legal limits on the quantity of the common resource consumed.

Question 4

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Accepted Answer

A) True 
 B)False

Question 5

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Accepted Answer

Free riding is benefiting from a good wi

Question 6

Figure 5-8
   
Consider a chemical plant that discharges toxic fumes over a nearby community.To reduce the emissions of toxic fumes the firm can install pollution abatement devices.Figure 5-8 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.
-Refer to Figure 5-8.What is the economically efficient level of pollution reduction?

Accepted Answer

A) 12.5 million tons 
B) 9 million tons 
C) 8 million tons 
D) 0 tons 
A) 12.5 million tons 
B) 9 million tons 
C) 8 million tons 
D) 0 tons

Question 7

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Accepted Answer

A) self-interest motives of producers and consumers 
B) a lack of concern for human rights 
C) a lack of competition 
D) a lack of clearly defined and enforced property rights 
A) self-interest motives of producers and consumers 
B) a lack of concern for human rights 
C) a lack of competition 
D) a lack of clearly defined and enforced property rights

Question 8

Figure 5-13
   
Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production.
-Refer to Figure 5-13.The market equilibrium price of gasoline is ________ per gallon.

Accepted Answer

A) $3.00 
B) $3.75 
C) $4.25 
D) $5.00 
A) $3.00 
B) $3.75 
C) $4.25 
D) $5.00

Question 9

If the social cost of producing a good or service exceeds the private cost

Accepted Answer

A) a positive externality exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) the market achieves economic efficiency. 
D) a negative externality exists. 
A) a positive externality exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) the market achieves economic efficiency. 
D) a negative externality exists.

Question 10

Figure 5-2
   
Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The size of marginal external costs can be determined by

Accepted Answer

A) S₂ + S₁ at each output level. 
B) S₂ - S₁ at each output level. 
C) the supply curve S₂. 
D) the supply curve S₁. 
A) S₂ + S₁ at each output level. 
B) S₂ - S₁ at each output level. 
C) the supply curve S₂. 
D) the supply curve S₁.

Question 11

Which of the following is an example of a positive externality?

Accepted Answer

A) raising the speed limit to 60 mph in school zones 
B) planting trees along a sidewalk which add beauty and create shade 
C) permitting smoking on commercial airplanes 
D) a police department stops enforcing DUI laws 
A) raising the speed limit to 60 mph in school zones 
B) planting trees along a sidewalk which add beauty and create shade 
C) permitting smoking on commercial airplanes 
D) a police department stops enforcing DUI laws

Question 12

An externality is

Accepted Answer

A) a benefit realized by the purchaser of a good or service. 
B) a cost paid for by the producer of a good or service. 
C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. 
D) anything that is external or not relevant to the production of a good or service. 
A) a benefit realized by the purchaser of a good or service. 
B) a cost paid for by the producer of a good or service. 
C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. 
D) anything that is external or not relevant to the production of a good or service.

Question 13

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep those who do not pay for the quasi-public good from enjoying the benefits of the good.

Accepted Answer

A) True 
 B)False

Question 14

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

Accepted Answer

A) command-and-control policies. 
B) strong-arm tactics. 
C) global initiatives. 
D) market-based policies. 
A) command-and-control policies. 
B) strong-arm tactics. 
C) global initiatives. 
D) market-based policies.

Question 15

A positive externality causes

Accepted Answer

A) the marginal social benefit to be equal to the marginal private cost of the last unit produced. 
B) the marginal social benefit to be less than the marginal private cost of the last unit produced. 
C) the marginal social benefit to exceed the marginal private cost of the last unit produced. 
D) the marginal private benefit to exceed the marginal social cost of the last unit produced. 
A) the marginal social benefit to be equal to the marginal private cost of the last unit produced. 
B) the marginal social benefit to be less than the marginal private cost of the last unit produced. 
C) the marginal social benefit to exceed the marginal private cost of the last unit produced. 
D) the marginal private benefit to exceed the marginal social cost of the last unit produced.

Question 16

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following displays these two characteristics: nonrivalry and excludability?

Accepted Answer

A) public goods 
B) private goods 
C) quasi-public goods 
D) common resources 
A) public goods 
B) private goods 
C) quasi-public goods 
D) common resources

Question 18

Consider the following characteristics:
A.low transactions costs
B.small levels of pollution
C.high levels of pollution
D.clear assignment of property rights
Which of the above are assumptions behind the Coase Theorem?

Accepted Answer

A) a, b, and d 
B) a, c, and d 
C) a and d 
D) a only 
A) a, b, and d 
B) a, c, and d 
C) a and d 
D) a only

Question 19

A tragedy of the commons occurs when a resource is

Accepted Answer

A) rival and excludable. 
B) rival and non-excludable. 
C) non-rival and non-excludable. 
D) non-rival and excludable. 
A) rival and excludable. 
B) rival and non-excludable. 
C) non-rival and non-excludable. 
D) non-rival and excludable.

Question 20

When there is a positive externality

Accepted Answer

A) the marginal private benefit received by consumers is greater than the external benefit. 
B) the marginal social benefit received by consumers is greater than the marginal private benefit. 
C) the marginal private benefit received by consumers is greater than the marginal private cost. 
D) the marginal private benefit received by consumers is greater than the marginal social benefit. 
A) the marginal private benefit received by consumers is greater than the external benefit. 
B) the marginal social benefit received by consumers is greater than the marginal private benefit. 
C) the marginal private benefit received by consumers is greater than the marginal private cost. 
D) the marginal private benefit received by consumers is greater than the marginal social benefit.

A carbon tax which is designed to reduce pollution is an example of a

An external benefit is created when you pursue a college education.

Overuse of a common resource may be avoided by all of the following methods except

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Figure 5-13 Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13.The market equilibrium price of gasoline is ________ per gallon.

If the social cost of producing a good or service exceeds the private cost

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The size of marginal external costs can be determined by

Which of the following is an example of a positive externality?

An externality is

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep those who do not pay for the quasi-public good from enjoying the benefits of the good.

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

A positive externality causes

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Which of the following displays these two characteristics: nonrivalry and excludability?

Consider the following characteristics: A.low transactions costs B.small levels of pollution C.high levels of pollution D.clear assignment of property rights Which of the above are assumptions behind the Coase Theorem?

A tragedy of the commons occurs when a resource is

When there is a positive externality

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 5: Externalities, Environmental Policy, and Public Goods

A carbon tax which is designed to reduce pollution is an example of a

An external benefit is created when you pursue a college education.

Overuse of a common resource may be avoided by all of the following methods except

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Figure 5-13 Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13.The market equilibrium price of gasoline is ________ per gallon.

If the social cost of producing a good or service exceeds the private cost

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The size of marginal external costs can be determined by

Which of the following is an example of a positive externality?

An externality is

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep those who do not pay for the quasi-public good from enjoying the benefits of the good.

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

A positive externality causes

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Which of the following displays these two characteristics: nonrivalry and excludability?

Consider the following characteristics: A.low transactions costs B.small levels of pollution C.high levels of pollution D.clear assignment of property rights Which of the above are assumptions behind the Coase Theorem?

A tragedy of the commons occurs when a resource is

When there is a positive externality

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters