Question 1

The economist that devised a method for setting the level of a public good efficiently is

Accepted Answer

A)  John Nash 
B)  Arthur Cecil Pigou 
C)  Ronald Coase 
D)  Theodore Groves 
A)  John Nash 
B)  Arthur Cecil Pigou 
C)  Ronald Coase 
D)  Theodore Groves

Question 2

Three hundred paper mills compete in the paper market.The total cost of production (in dollars)for each mill is given by the formula   ,where Qmill indicates the mills annual production in thousands of tons.The marginal external cost of a mill's production (in dollars)is given by the formula   Finally,annual market demand (in thousands of tons)is given by the formula   Find the competitive price that would prevail without externalities.

Accepted Answer

A)  $1,400 
B)  $1657.14 
C)  $685.71 
D)  $1,200 
A)  $1,400 
B)  $1657.14 
C)  $685.71 
D)  $1,200

Question 3

Three hundred paper mills compete in the paper market.The total cost of production (in dollars)for each mill is given by the formula   ,where Qmill indicates the mills annual production in thousands of tons.The marginal external cost of a mill's production (in dollars)is given by the formula   Finally,annual market demand (in thousands of tons)is given by the formula   Find the competitive quantity.

Accepted Answer

A)  108,000 
B)  60,000 
C)  500 
D)  0 
A)  108,000 
B)  60,000 
C)  500 
D)  0

Question 4

Your neighbor likes to blast 1970's rock music and the louder the better.The loud music imposes a cost on you because it disrupts your study of economics.Let D stand for the volume of his music in decibels,B for his benefits and C for your costs,where B and C are in dollars.For any given volume,D,your neighbor's benefit is   and your cost is   Find the efficient volume,D.

Accepted Answer

A)  90 
B)  95 
C)  115 
D)  345 
A)  90 
B)  95 
C)  115 
D)  345

Question 5

When a firm ignores external costs

Accepted Answer

A)  It is not willing to produce too much of the good at the given price 
B)  It is not willing to produce too little of the good at the given price 
C)  The good is priced too cheaply in equilibrium 
D)  It is willing to produce too much of the good at the given price 
A)  It is not willing to produce too much of the good at the given price 
B)  It is not willing to produce too little of the good at the given price 
C)  The good is priced too cheaply in equilibrium 
D)  It is willing to produce too much of the good at the given price

Question 6

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula   Patrols cost $25 per hour.If each store provided security independently,how much would each store purchase?

Accepted Answer

A)  15 person-hours of patrols per week 
B)  7 person-hours of patrols per week 
C)  8 person-hours of patrols per week 
D)  16 person-hours of patrols per week 
A)  15 person-hours of patrols per week 
B)  7 person-hours of patrols per week 
C)  8 person-hours of patrols per week 
D)  16 person-hours of patrols per week

Question 7

A public good

Accepted Answer

A)  Is a good that is nonrival 
B)  Is a good that is nonexcludable 
C)  Is often provided by the government 
D)  All of these 
A)  Is a good that is nonrival 
B)  Is a good that is nonexcludable 
C)  Is often provided by the government 
D)  All of these

Question 8

Why might bargaining break down when parties negotiate to remedy a market failure and its associated externality?

Accepted Answer

Two of more parties might fail to addres

Question 9

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula   Patrols cost $25 per hour.Find the marginal social benefit function.

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 10

Three hundred paper mills compete in the paper market.The total cost of production (in dollars)for each mill is given by the formula   ,where Qmill indicates the mills annual production in thousands of tons.The marginal external cost of a mill's production (in dollars)is given by the formula   Finally,annual market demand (in thousands of tons)is given by the formula   Find the market supply curve.

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 11

A negative externality is created if

Accepted Answer

A)  An action harms someone not involved in the market transaction 
B)  An action benefits someone not involved in the market transaction 
C)  Neither helps nor hurts someone not involved in the market transaction 
D)  An action benefits someone involved in the market transaction 
A)  An action harms someone not involved in the market transaction 
B)  An action benefits someone not involved in the market transaction 
C)  Neither helps nor hurts someone not involved in the market transaction 
D)  An action benefits someone involved in the market transaction

Question 12

The economist who won the Nobel Prize in Economics for his path-breaking analysis of the ways in which property rights,transaction costs and institutions affect the allocation of economic resources is

Accepted Answer

A)  John Nash 
B)  Arthur Cecil Pigou 
C)  Ronald Coase 
D)  Theodore Groves 
A)  John Nash 
B)  Arthur Cecil Pigou 
C)  Ronald Coase 
D)  Theodore Groves

The economist that devised a method for setting the level of a public good efficiently is

When a firm ignores external costs

A public good

Why might bargaining break down when parties negotiate to remedy a market failure and its associated externality?

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula Patrols cost $25 per hour.Find the marginal social benefit function.

A negative externality is created if

The economist who won the Nobel Prize in Economics for his path-breaking analysis of the ways in which property rights,transaction costs and institutions affect the allocation of economic resources is

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Filters

Exam 20: Externalities and Public Goods

The economist that devised a method for setting the level of a public good efficiently is

When a firm ignores external costs

A public good

Why might bargaining break down when parties negotiate to remedy a market failure and its associated externality?

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula Patrols cost $25 per hour.Find the marginal social benefit function.

A negative externality is created if

The economist who won the Nobel Prize in Economics for his path-breaking analysis of the ways in which property rights,transaction costs and institutions affect the allocation of economic resources is

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Filters