Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. \[\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Quick Burger } \\ \text { Operates a } \\ \text { Drive-Through } \\ \text { Window } \end{array} & \begin{array} { c } \text { Quick Burger } \\ \text { Does Not Operate } \\ \text { Drive-Through } \\ \text { Window } \end{array} \\ \hline \text { Quick Burger } & \$ 24,000 & \$ 15,000 \\ \hline \text { The Sunshine Café } & \$ 11,000 & \$ 23,000 \\ \hline \end{array}\] Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?

A) Quick Burger pays The Sunshine Café $12,500 per month to operate the drive-through window. B) Quick Burger pays The Sunshine Café $10,500 per month to operate the drive-through window. C) The Sunshine Café pays Quick Burger $12,500 per month not to operate the drive-through window. D) The Sunshine Café pays Quick Burger $10,500 per month not to operate the drive-though window. A) Quick Burger pays The Sunshine Café $12,500 per month to operate the drive-through window. B) Quick Burger pays The Sunshine Café $10,500 per month to operate the drive-through window. C) The Sunshine Café pays Quick Burger $12,500 per month not to operate the drive-through window. D) The Sunshine Café pays Quick Burger $10,500 per month not to operate the drive-though window.

The following data show the relationship between the number of drivers who leave for work at 8:00 a.m., their average commute time, and their marginal benefit of commuting. \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of Drivers } \\ \text { Who Leave at } 8 \text { am } \end{array} & \begin{array} { c } \text { Average } \\ \text { Commute Time } \end{array} & \begin{array} { c } \text { Marginal } \\ \text { Benefit } \end{array} \\ \hline 100 & 30 \text { minutes } & \$ 10 \\ \hline 200 & 65 \text { minutes } & \$ 8 \\ \hline 300 & 110 \text { minutes } & \$ 4 \\ \hline 400 & 170 \text { minutes } & \$ 3 \\ \hline 500 & 260 \text { minutes } & \$ 1 \\ \hline \end{array}\] If there is no charge to use the highway, then one would expect that ______ the socially optimal number of drivers will leave at 8:00 a.m. because ______.

A) more; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time B) more; the social marginal benefit of using the highway is greater than the private marginal benefit C) less; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time D) less; the private marginal benefit of using the highway is greater than the social marginal benefit A) more; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time B) more; the social marginal benefit of using the highway is greater than the private marginal benefit C) less; each driver's use of the highway imposes an external cost on other drivers by increasing the commute time D) less; the private marginal benefit of using the highway is greater than the social marginal benefit

Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. \[\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Quick Burger } \\ \text { Operates a } \\ \text { Drive-Through } \\ \text { Window } \end{array} & \begin{array} { c } \text { Quick Burger } \\ \text { Does Not Operate } \\ \text { Drive-Through } \\ \text { Window } \end{array} \\ \hline \text { Quick Burger } & \$ 24,000 & \$ 15,000 \\ \hline \text { The Sunshine Café } & \$ 11,000 & \$ 23,000 \\ \hline \end{array}\] Is it socially optimal for Quick Burger to operate a drive-through window?

A) No, because The Sunshine Café's payoff is lower when Quick Burger operates a drive-through window. B) No, because total payoffs are higher when Quick Burger does not operate a drive-through window. C) Yes, because Quick Burger's payoff is higher when Quick Burger operates a drive-though window. D) Yes, because total payoffs are higher when Quick Burger operates a drive-through window. A) No, because The Sunshine Café's payoff is lower when Quick Burger operates a drive-through window. B) No, because total payoffs are higher when Quick Burger does not operate a drive-through window. C) Yes, because Quick Burger's payoff is higher when Quick Burger operates a drive-though window. D) Yes, because total payoffs are higher when Quick Burger operates a drive-through window.

Exam 10: Externalities and Property Rights

Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar; nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. If all ten people can negotiate with each other at no cost, then which of the following outcomes is consistent with the Coase theorem?

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. According to this graph, the marginal benefit of litter removal is highest when the ______ bag of litter is removed.

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(Multiple Choice)

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Question 2

Correct Answer:

Verified

If the marginal cost of reducing pollution is positive, then:

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(Multiple Choice)

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Question 3

Correct Answer:

Verified

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. Picking up the 20^th bag of litter would:

(Multiple Choice)

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Question 4

Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly. Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore-eliminating device for $50 per month. Curly would be willing to pay _____ per month to eliminate Moe's snoring.

(Multiple Choice)

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Question 5

Suppose that a vaccine is developed for a highly contagious strain of flu. The likelihood that anyone will get this flu decreases as more people receive the vaccine. One of the demand curves below represents the private demand for the vaccine and the other represents the social demand for the vaccine. The private demand for the vaccine is given by , and social demand for the vaccine is given by .

(Multiple Choice)

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Question 6

Lunch in Jamie's dorm is an all-you-can-eat buffet, served from 11 a.m. until 1 p.m. By noon, the buffet is picked over, and by 12:30, there are very few popular items left. The garbage bins, though, are full of food. Over time, you would expect that students would:

(Multiple Choice)

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Question 7

Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates a Drive-Through Window Quick Burger Does Not Operate Drive-Through Window Quick Burger \ 24,000 \ 15,000 The Sunshine Caf \ 11,000 \ 23,000 Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?

(Multiple Choice)

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Question 8

The following data show the relationship between the number of drivers who leave for work at 8:00 a.m., their average commute time, and their marginal benefit of commuting. Number of Drivers Who Leave at 8 am Average Commute Time Marginal Benefit 100 30 minutes \ 10 200 65 minutes \ 8 300 110 minutes \ 4 400 170 minutes \ 3 500 260 minutes \ 1 If there is no charge to use the highway, then one would expect that the socially optimal number of drivers will leave at 8:00 a.m. because .

(Multiple Choice)

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Question 9

When Brady is driving he throws his cigarette butts out the window, reasoning that other people will clean up the litter on the side of the road. By throwing his cigarette butts out the window, Brady is:

(Multiple Choice)

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Question 10

Suppose that the EPA has proposed strict controls on the amount of sulfur that diesel fuel contains. These controls were designed to fully offset the cost of pollution generated by diesel fuel vehicles. The effect of the regulation is estimated to increase the equilibrium price of a gallon of diesel fuel by 10 cents. Assuming that the supply of diesel fuel has a positive slope and demand has a negative slope, one can infer that the EPA determined that:

(Multiple Choice)

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Question 11

Refer to the figure below. Private incentives in this market generate deadweight loss equal to _______.

(Multiple Choice)

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Question 12

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. The socially optimal number of bags of litter removed from the roadside each day is:

(Multiple Choice)

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Question 13

Suppose that a vaccine is developed for a highly contagious strain of flu. The likelihood that anyone will get this flu decreases as more people receive the vaccine. One of the demand curves below represents the private demand for the vaccine and the other represents the social demand for the vaccine. The private market equilibrium quantity is ______ doses per day.

(Multiple Choice)

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Question 14

If either the production or consumption of a good generates an external benefit, then the:

(Multiple Choice)

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Question 15

If an activity generates a positive externality, the government can increase total economic surplus by the activity, and if an activity generates a negative externality, the government can increase total economic surplus by the activity.

(Multiple Choice)

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Question 16

Refer to the figure below. From this graph, you can infer that paper production:

(Multiple Choice)

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Question 17

Refer to the figure below. The deadweight loss at the market equilibrium quantity is equal to the area ______.

(Multiple Choice)

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Question 18

Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates a Drive-Through Window Quick Burger Does Not Operate Drive-Through Window Quick Burger \ 24,000 \ 15,000 The Sunshine Caf \ 11,000 \ 23,000 Is it socially optimal for Quick Burger to operate a drive-through window?

(Multiple Choice)

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Question 19

Which of the following is most likely to be used efficiently?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 130

If the marginal cost of reducing pollution is positive, then:

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. Picking up the 20^th bag of litter would:

Lunch in Jamie's dorm is an all-you-can-eat buffet, served from 11 a.m. until 1 p.m. By noon, the buffet is picked over, and by 12:30, there are very few popular items left. The garbage bins, though, are full of food. Over time, you would expect that students would:

When Brady is driving he throws his cigarette butts out the window, reasoning that other people will clean up the litter on the side of the road. By throwing his cigarette butts out the window, Brady is:

Refer to the figure below. Private incentives in this market generate deadweight loss equal to _______.

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. The socially optimal number of bags of litter removed from the roadside each day is:

If either the production or consumption of a good generates an external benefit, then the:

If an activity generates a positive externality, the government can increase total economic surplus by the activity, and if an activity generates a negative externality, the government can increase total economic surplus by the activity.

Refer to the figure below. From this graph, you can infer that paper production:

Refer to the figure below. The deadweight loss at the market equilibrium quantity is equal to the area ______.

Which of the following is most likely to be used efficiently?

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Exam 10: Externalities and Property Rights

If the marginal cost of reducing pollution is positive, then:

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. Picking up the 20th bag of litter would:

Lunch in Jamie's dorm is an all-you-can-eat buffet, served from 11 a.m. until 1 p.m. By noon, the buffet is picked over, and by 12:30, there are very few popular items left. The garbage bins, though, are full of food. Over time, you would expect that students would:

When Brady is driving he throws his cigarette butts out the window, reasoning that other people will clean up the litter on the side of the road. By throwing his cigarette butts out the window, Brady is:

Refer to the figure below. Private incentives in this market generate deadweight loss equal to _______.

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. The socially optimal number of bags of litter removed from the roadside each day is:

If either the production or consumption of a good generates an external benefit, then the:

If an activity generates a positive externality, the government can increase total economic surplus by ______ the activity, and if an activity generates a negative externality, the government can increase total economic surplus by ______ the activity.

Refer to the figure below. From this graph, you can infer that paper production:

Refer to the figure below. The deadweight loss at the market equilibrium quantity is equal to the area ______.

Which of the following is most likely to be used efficiently?

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. Picking up the 20^th bag of litter would:

If an activity generates a positive externality, the government can increase total economic surplus by the activity, and if an activity generates a negative externality, the government can increase total economic surplus by the activity.