Question 1

All of the following are characteristics of public goods EXCEPT

Accepted Answer

A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) The exclusion principle. 
D) The goods are perfectly divisible. 
A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) The exclusion principle. 
D) The goods are perfectly divisible.

Question 2

-Refer to the above figure.Medicare subsidies have increased the price of medical services to $\mathrm { P } _ { \mathrm { s } }$ .The quantity demanded of medical services is

Accepted Answer

A)  $\mathrm { Q } _ { \mathrm { M } }$ . 
B)  $\mathrm { Q } _ { 0 }$ . 
C)  $\mathrm { Q } _ { \mathrm { d } }$ . 
D) undetermined without more information. 
A)  $\mathrm { Q } _ { \mathrm { M } }$ . 
B)  $\mathrm { Q } _ { 0 }$ . 
C)  $\mathrm { Q } _ { \mathrm { d } }$ . 
D) undetermined without more information.

Question 3

In the United States,which of the following is an example of a government-sponsored good?

Accepted Answer

A) Cable T.V. 
B) Concerts 
C) Cigarettes 
D) Coffee 
A) Cable T.V. 
B) Concerts 
C) Cigarettes 
D) Coffee

Question 4

A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities.A tax is imposed on the firm,equal to the costs of environmental damage caused by a unit of the emissions.What is the result?

Accepted Answer

A) The quantity of chemical solvents produced now will be the efficient amount. 
B) Demand for the chemical solvents will increase. 
C) Demand for the chemical solvents will decrease. 
D) Consumers of the chemical solvents will be willing to pay the full amount of the tax,and so the quantity produced will be unaffected. 
A) The quantity of chemical solvents produced now will be the efficient amount. 
B) Demand for the chemical solvents will increase. 
C) Demand for the chemical solvents will decrease. 
D) Consumers of the chemical solvents will be willing to pay the full amount of the tax,and so the quantity produced will be unaffected.

Question 5

-Refer to the above figure.The market equilibrium quantity is $\mathrm { Q } _ { 1 }$ .Point $\mathrm { Q } _ { 2 }$
Represents the optimal amount of production.The government can achieve the optimal outcome by

Accepted Answer

A) setting the price at $\mathrm { P } _ { 3 }$ . 
B) providing a per-unit subsidy to consumers equal to $\mathrm { P } _ { 3 }$ -
$P _ { 1 }$ . 
C) providing a per-unit subsidy to consumers equal to $P _ { 2 }$ -
$P _ { 1 }$ . 
D) establishing a tax equal to $P _ { 2 }$ -
$P _ { 1 }$ per unit of the good sold. 
A) setting the price at $\mathrm { P } _ { 3 }$ . 
B) providing a per-unit subsidy to consumers equal to $\mathrm { P } _ { 3 }$ -
$P _ { 1 }$ . 
C) providing a per-unit subsidy to consumers equal to $P _ { 2 }$ -
$P _ { 1 }$ . 
D) establishing a tax equal to $P _ { 2 }$ -
$P _ { 1 }$ per unit of the good sold.

Question 6

Government can correct for negative externalities by

Accepted Answer

A) decreasing taxes. 
B) increasing taxes or regulation. 
C) allowing the market system to correct the problem. 
D) decreasing the costs to those responsible for the externality. 
A) decreasing taxes. 
B) increasing taxes or regulation. 
C) allowing the market system to correct the problem. 
D) decreasing the costs to those responsible for the externality.

Question 7

When a good causes positive external benefits to accrue to third parties,an unfettered market will

Accepted Answer

A) under-allocate resources to the good causing the benefit. 
B) over-allocate resources to the good causing the benefit. 
C) cause the equilibrium quantity,established before the benefit is taken into account,to be produced more efficiently. 
D) eliminate such goods. 
A) under-allocate resources to the good causing the benefit. 
B) over-allocate resources to the good causing the benefit. 
C) cause the equilibrium quantity,established before the benefit is taken into account,to be produced more efficiently. 
D) eliminate such goods.

Question 8

Why does our government enforce antitrust legislation?

Accepted Answer

A) because monopolies are known to be unfair to their stockholders 
B) because monopolies are known to be unfair to their employees 
C) because the government wants to create competition in markets in the interests of promoting efficiency 
D) because the government wants to create competition in markets in the interests of promoting an equal distribution of income 
A) because monopolies are known to be unfair to their stockholders 
B) because monopolies are known to be unfair to their employees 
C) because the government wants to create competition in markets in the interests of promoting efficiency 
D) because the government wants to create competition in markets in the interests of promoting an equal distribution of income

Question 9

The amount of government spending on education per public school student has ________ since 1960,and the achievement level of students has generally ________ since that time.

Accepted Answer

A) increased; increased 
B) decreased; decreased 
C) increased; decreased 
D) decreased; increased 
A) increased; increased 
B) decreased; decreased 
C) increased; decreased 
D) decreased; increased

Question 10

As a share of total national income,government spending generally has

Accepted Answer

A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago,and then decreased steadily. 
A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago,and then decreased steadily.

Question 11

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

Accepted Answer

A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality. 
A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality.

Question 12

An example of an in-kind transfer is

Accepted Answer

A) national defense. 
B) Social Security. 
C) low-cost public housing. 
D) Unemployment benefits. 
A) national defense. 
B) Social Security. 
C) low-cost public housing. 
D) Unemployment benefits.

Question 13

Is there any common characteristic shared by government-inhibited goods and government-sponsored goods? Explain briefly.

Accepted Answer

Government-inhibited and government-spon

Question 14

Suppose that the market price of good X equals the firm's cost of producing that good,but it does not reflect any costs imposed on society.Which of the following is FALSE?

Accepted Answer

A) The good is priced too low. 
B) An external benefit is associated with good X. 
C) Resources are over-allocated in the production of good X. 
D) Too much of good X is being produced. 
A) The good is priced too low. 
B) An external benefit is associated with good X. 
C) Resources are over-allocated in the production of good X. 
D) Too much of good X is being produced.

Question 15

An effluent fee is a

Accepted Answer

A) subsidy given to the producer of a positive externality. 
B) charge to a polluter that gives the right to discharge pollution into the air. 
C) fine imposed on a polluter for dumping illegal pollution. 
D) charge for a public good. 
A) subsidy given to the producer of a positive externality. 
B) charge to a polluter that gives the right to discharge pollution into the air. 
C) fine imposed on a polluter for dumping illegal pollution. 
D) charge for a public good.

Question 16

What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?

Accepted Answer

A positive externality leads to the equi

Question 17

What is the free-rider problem,and how is it related to public goods?

Accepted Answer

The free-rider problem arises from the e

Question 18

Which of the following is TRUE about the political and market systems of voting?

Accepted Answer

A) The political voting system functions according to proportional rule,while the market voting system functions according to majority rule. 
B) The political voting system functions according to majority rule,while the market voting system functions according to proportional rule. 
C) The political voting system functions according to minority rule,while the market voting system functions according to majority rule. 
D) The political system and the market system are identical. 
A) The political voting system functions according to proportional rule,while the market voting system functions according to majority rule. 
B) The political voting system functions according to majority rule,while the market voting system functions according to proportional rule. 
C) The political voting system functions according to minority rule,while the market voting system functions according to majority rule. 
D) The political system and the market system are identical.

Question 19

What is the purpose of antitrust legislation?

Accepted Answer

Antitrust legislation makes illegal cert

Question 20

If a nation's government determines that consumption of cigarettes should be discouraged,then this means that the government has judged cigarettes to be a(n)

Accepted Answer

A) government-sponsored good. 
B) exclusive good. 
C) government-inhibited good. 
D) public good. 
A) government-sponsored good. 
B) exclusive good. 
C) government-inhibited good. 
D) public good.

All of the following are characteristics of public goods EXCEPT

In the United States,which of the following is an example of a government-sponsored good?

A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities.A tax is imposed on the firm,equal to the costs of environmental damage caused by a unit of the emissions.What is the result?

Government can correct for negative externalities by

When a good causes positive external benefits to accrue to third parties,an unfettered market will

Why does our government enforce antitrust legislation?

The amount of government spending on education per public school student has since 1960,and the achievement level of students has generally since that time.

As a share of total national income,government spending generally has

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

An example of an in-kind transfer is

Is there any common characteristic shared by government-inhibited goods and government-sponsored goods? Explain briefly.

Suppose that the market price of good X equals the firm's cost of producing that good,but it does not reflect any costs imposed on society.Which of the following is FALSE?

An effluent fee is a

What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?

What is the free-rider problem,and how is it related to public goods?

Which of the following is TRUE about the political and market systems of voting?

What is the purpose of antitrust legislation?

If a nation's government determines that consumption of cigarettes should be discouraged,then this means that the government has judged cigarettes to be a(n)

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Public Spending and Public Choice

All of the following are characteristics of public goods EXCEPT

-Refer to the above figure.Medicare subsidies have increased the price of medical services to Ps\mathrm { P } _ { \mathrm { s } }Ps​ .The quantity demanded of medical services is

In the United States,which of the following is an example of a government-sponsored good?

A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities.A tax is imposed on the firm,equal to the costs of environmental damage caused by a unit of the emissions.What is the result?

-Refer to the above figure.The market equilibrium quantity is Q1\mathrm { Q } _ { 1 }Q1​ .Point Q2\mathrm { Q } _ { 2 }Q2​ Represents the optimal amount of production.The government can achieve the optimal outcome by

Government can correct for negative externalities by

When a good causes positive external benefits to accrue to third parties,an unfettered market will

Why does our government enforce antitrust legislation?

The amount of government spending on education per public school student has ________ since 1960,and the achievement level of students has generally ________ since that time.

As a share of total national income,government spending generally has

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

An example of an in-kind transfer is

Is there any common characteristic shared by government-inhibited goods and government-sponsored goods? Explain briefly.

Suppose that the market price of good X equals the firm's cost of producing that good,but it does not reflect any costs imposed on society.Which of the following is FALSE?

An effluent fee is a

What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?

What is the free-rider problem,and how is it related to public goods?

Which of the following is TRUE about the political and market systems of voting?

What is the purpose of antitrust legislation?

If a nation's government determines that consumption of cigarettes should be discouraged,then this means that the government has judged cigarettes to be a(n)

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

The amount of government spending on education per public school student has since 1960,and the achievement level of students has generally since that time.