Question 1

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

Accepted Answer

A)  the private cost of production 
B)  the social cost of production 
C)  the external cost of production 
D)  the explicit cost of production 
A)  the private cost of production 
B)  the social cost of production 
C)  the external cost of production 
D)  the explicit cost of production

Question 2

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

Accepted Answer

Private benefit from consumption is the

Question 3

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set

Accepted Answer

A)  equal to the marginal external cost at the economically efficient level of pollution. 
B)  equal to the marginal private cost of production at the economically efficient level of pollution. 
C)  equal to the amount of the deadweight loss created in the absence of a pollution tax. 
D)  at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. 
A)  equal to the marginal external cost at the economically efficient level of pollution. 
B)  equal to the marginal private cost of production at the economically efficient level of pollution. 
C)  equal to the amount of the deadweight loss created in the absence of a pollution tax. 
D)  at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Economists argue that the level of pollution should be

Accepted Answer

A)  reduced completely to zero because by definition, it is a negative external effect. 
B)  ignored because it has always been present since the beginning of history. 
C)  reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society. 
D)  best determined by elected officials who can speak on behalf of the public. 
A)  reduced completely to zero because by definition, it is a negative external effect. 
B)  ignored because it has always been present since the beginning of history. 
C)  reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society. 
D)  best determined by elected officials who can speak on behalf of the public.

Question 6

When a negative externality exists, the private market produces

Accepted Answer

A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost. 
A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost.

Question 7

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

Accepted Answer

non-excludable-anyone can consume the go

Question 8

Classifying a good as excludable means

Accepted Answer

A)  that someone can be barred from consuming the good based on race, creed or some other irrelevant characteristic. 
B)  that anyone who does not pay for the good cannot consume it. 
C)  that consumption of the good causes no externalities. 
D)  that a producer with patent or copyright protection can exclude any other producer from selling his product. 
A)  that someone can be barred from consuming the good based on race, creed or some other irrelevant characteristic. 
B)  that anyone who does not pay for the good cannot consume it. 
C)  that consumption of the good causes no externalities. 
D)  that a producer with patent or copyright protection can exclude any other producer from selling his product.

Question 9

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 10

Policies that mandate the installation of specific pollution control devices are called

Accepted Answer

A)  command and control policies. 
B)  benefit policies. 
C)  welfare policies. 
D)  incentive policies. 
A)  command and control policies. 
B)  benefit policies. 
C)  welfare policies. 
D)  incentive policies.

Question 11

Explain how mandatory seat belt laws may reduce the negative externalities of risky behaviour.

Accepted Answer

Mandatory seat belt laws are designed to

Question 12

-Refer to Figure 15-2. The efficient output level is

Accepted Answer

A)  Qd. 
B)  Qb. 
C)  Qa. 
D)  Qb - Qd. 
A)  Qd. 
B)  Qb. 
C)  Qa. 
D)  Qb - Qd.

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set

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

Economists argue that the level of pollution should be

When a negative externality exists, the private market produces

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

Classifying a good as excludable means

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

Policies that mandate the installation of specific pollution control devices are called

Explain how mandatory seat belt laws may reduce the negative externalities of risky behaviour.

-Refer to Figure 15-2. The efficient output level is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

The Distribution of Income and Social Policy

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Exam 15: Externalities , Environmental Policy and Public Goods

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set

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

Economists argue that the level of pollution should be

When a negative externality exists, the private market produces

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

Classifying a good as excludable means

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

Policies that mandate the installation of specific pollution control devices are called

Explain how mandatory seat belt laws may reduce the negative externalities of risky behaviour.

-Refer to Figure 15-2. The efficient output level is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

The Distribution of Income and Social Policy

Filters