Question 1

If the equilibrium quantity is equal to the socially optimal quantity,one can infer that:

Accepted Answer

A) the supply curve for the activity is below the socially optimal supply curve. 
B) there is no externality associated with this good. 
C) there is a positive externality associated with this good. 
D) there is a negative externality associated with this good. 
A) the supply curve for the activity is below the socially optimal supply curve. 
B) there is no externality associated with this good. 
C) there is a positive externality associated with this good. 
D) there is a negative externality associated with this good.

Question 2

In the case of ______,the invisible hand fails to generate the efficient outcome because buyers and sellers only take their self-interests into account.

Accepted Answer

A) either an external cost or an external benefit 
B) only an external cost 
C) only an external benefit 
D) unregulated markets 
A) either an external cost or an external benefit 
B) only an external cost 
C) only an external benefit 
D) unregulated markets

Question 3

Private incentives in markets with external benefits lead to _____;private incentives in markets with external costs lead to _____.

Accepted Answer

A) maximum total economic surplus;deadweight loss 
B) deadweight loss;deadweight loss 
C) excess total economic surplus;efficiency 
D) excess total economic surplus;deadweight loss 
A) maximum total economic surplus;deadweight loss 
B) deadweight loss;deadweight loss 
C) excess total economic surplus;efficiency 
D) excess total economic surplus;deadweight loss

Question 4

Taylor lives in a residential neighborhood that prides itself on well-groomed lawns.Taylor's neighbors find that the collective marginal benefit of someone else's well-groomed lawn is $10.Taylor,however,dislikes yard work and receives zero net benefit from an unkempt lawn and a net benefit of -$1 for a well-groomed lawn;the cost of maintaining the lawn is a dollar more than the benefit of having a well-groomed lawn. $$\begin{array} { l c c } 
& \text { Unkempt } & \text { Well-groomed } \
\text { Net Value to Taylor } & 0 & - 1 \
\text { Net Value to Taylor's neighbors } & 0 & + 10
\end{array}$$
Refer to the information given above.If Taylor acts independently,Taylor's lawn will be __________,and total economic surplus to the rest of the neighborhood will be __________.

Accepted Answer

A) well groomed;$10 
B) well groomed;$5 
C) unkempt;$0 
D) unkempt;$5 
A) well groomed;$10 
B) well groomed;$5 
C) unkempt;$0 
D) unkempt;$5

Question 5

According to the textbook,if all linemen in the NFL took anabolic steroids,the rank ordering of linemen (1st,2nd,3rd,etc. )would be unchanged.This assumes that:

Accepted Answer

A) anabolic steroids have no effect on performance. 
B) anabolic steroids improve the performance of all NFL linemen by the same amount. 
C) steroid usage is widespread. 
D) anabolic steroids are legal. 
A) anabolic steroids have no effect on performance. 
B) anabolic steroids improve the performance of all NFL linemen by the same amount. 
C) steroid usage is widespread. 
D) anabolic steroids are legal.

Question 6

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.
Refer to the information given above.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:

Accepted Answer

A) the external benefit of using diesel fuel is less than 10 cents. 
B) the external cost of using diesel fuel is greater than 10 cents. 
C) the external cost of using diesel fuel is less than 10 cents. 
D) the external cost of using diesel fuel is equal to 10 cents. 
A) the external benefit of using diesel fuel is less than 10 cents. 
B) the external cost of using diesel fuel is greater than 10 cents. 
C) the external cost of using diesel fuel is less than 10 cents. 
D) the external cost of using diesel fuel is equal to 10 cents.

Question 7

If being labeled a nerd (someone who studies a lot and has high grades)in high school or college is a social negative then,according to the textbook:

Accepted Answer

A) this is a cruel and unfair stereotype. 
B) those who study hard would be better off it this negative stereotype was eliminated. 
C) the negative stereotype serves to discourage some students from studying hard thus increasing the payoff to those who do. 
D) the negative stereotype serves to comfort those who don't study and make poor grades. 
A) this is a cruel and unfair stereotype. 
B) those who study hard would be better off it this negative stereotype was eliminated. 
C) the negative stereotype serves to discourage some students from studying hard thus increasing the payoff to those who do. 
D) the negative stereotype serves to comfort those who don't study and make poor grades.

If the equilibrium quantity is equal to the socially optimal quantity,one can infer that:

In the case of ______,the invisible hand fails to generate the efficient outcome because buyers and sellers only take their self-interests into account.

Private incentives in markets with external benefits lead to _;private incentives in markets with external costs lead to _.

According to the textbook,if all linemen in the NFL took anabolic steroids,the rank ordering of linemen (1^st,2^nd,3^rd,etc. )would be unchanged.This assumes that:

If being labeled a nerd (someone who studies a lot and has high grades)in high school or college is a social negative then,according to the textbook:

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

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Monetary Policy and the Federal Reserve

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

Exam 10: Externalities and Property Rights

If the equilibrium quantity is equal to the socially optimal quantity,one can infer that:

In the case of ______,the invisible hand fails to generate the efficient outcome because buyers and sellers only take their self-interests into account.

Private incentives in markets with external benefits lead to _____;private incentives in markets with external costs lead to _____.

According to the textbook,if all linemen in the NFL took anabolic steroids,the rank ordering of linemen (1st,2nd,3rd,etc. )would be unchanged.This assumes that:

If being labeled a nerd (someone who studies a lot and has high grades)in high school or college is a social negative then,according to the textbook:

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

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Monetary Policy and the Federal Reserve

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

Private incentives in markets with external benefits lead to _;private incentives in markets with external costs lead to _.

According to the textbook,if all linemen in the NFL took anabolic steroids,the rank ordering of linemen (1^st,2^nd,3^rd,etc. )would be unchanged.This assumes that: