Question 1

By definition,a government-sponsored good

Accepted Answer

A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare. 
A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare.

Question 2

Inoculations of children against infectious diseases are

Accepted Answer

A) an example of an external benefit. 
B) an example of an external cost. 
C) dangerous for society. 
D) an example of a public good. 
A) an example of an external benefit. 
B) an example of an external cost. 
C) dangerous for society. 
D) an example of a public good.

Question 3

-In the above figure,market equilibrium at point E yields the quantity X.The quantity   is the socially optimal quantity.Point E indicates that currently there is

Accepted Answer

A) a negative externality. 
B) a positive externality. 
C) a public good. 
D) a positive externality with subsidy. 
A) a negative externality. 
B) a positive externality. 
C) a public good. 
D) a positive externality with subsidy.

Question 4

Private goods are those goods

Accepted Answer

A) that violate the principle of rival consumption. 
B) for which no public market exists. 
C) that can only be consumed by one individual at a time. 
D) to which the non-exclusion principle applies. 
A) that violate the principle of rival consumption. 
B) for which no public market exists. 
C) that can only be consumed by one individual at a time. 
D) to which the non-exclusion principle applies.

Question 5

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

Accepted Answer

Government-inhibited and government-spon

Question 6

An example of a market failure is

Accepted Answer

A) a firm is dumping toxic waste that is making people sick. 
B) when not everyone who wants to see a major league football game can. 
C) when there is an increase in demand and a shortage develops. 
D) unemployment. 
A) a firm is dumping toxic waste that is making people sick. 
B) when not everyone who wants to see a major league football game can. 
C) when there is an increase in demand and a shortage develops. 
D) unemployment.

Question 7

Medicare

Accepted Answer

A) subsidizes the care of older people,which gives them NO incentive to consume more medical services. 
B) subsidizes the care of older people,which gives them an incentive to consume more medical services. 
C) subsidizes the care of young people,which gives them an incentive to consume less medical services. 
D) subsidizes the care of middle aged people,which gives them an incentive to consume more medical services. 
A) subsidizes the care of older people,which gives them NO incentive to consume more medical services. 
B) subsidizes the care of older people,which gives them an incentive to consume more medical services. 
C) subsidizes the care of young people,which gives them an incentive to consume less medical services. 
D) subsidizes the care of middle aged people,which gives them an incentive to consume more medical services.

Question 8

An effluent fee is an example of

Accepted Answer

A) a government policy to correct for an external benefit. 
B) a government policy to promote the production of a product with an external cost. 
C) a government policy to promote the production of a product with an external benefit. 
D) a government policy to correct for an external cost. 
A) a government policy to correct for an external benefit. 
B) a government policy to promote the production of a product with an external cost. 
C) a government policy to promote the production of a product with an external benefit. 
D) a government policy to correct for an external cost.

Question 9

Education in the United States is

Accepted Answer

A) subsidized mainly by state and local governments. 
B) funded by the federal government only. 
C) paid for by the parents of students in public school system. 
D) paid for by Social Security taxes. 
A) subsidized mainly by state and local governments. 
B) funded by the federal government only. 
C) paid for by the parents of students in public school system. 
D) paid for by Social Security taxes.

Question 10

Which of the following is an example of a negative externality?

Accepted Answer

A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B) The opening of a new shopping mall increases the business of nearby restaurants. 
C) A consumer pays a higher price than another consumer does for the same product. 
D) Consumers pay a sales tax in addition to the price of a product. 
A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B) The opening of a new shopping mall increases the business of nearby restaurants. 
C) A consumer pays a higher price than another consumer does for the same product. 
D) Consumers pay a sales tax in addition to the price of a product.

Question 11

When negative externalities exist,the private market equilibrium represents a

Accepted Answer

A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high. 
A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high.

Question 12

An economic activity in which benefits or costs affect third parties is called

Accepted Answer

A) a public good. 
B) a third-party good. 
C) the exclusion principle. 
D) an externality. 
A) a public good. 
B) a third-party good. 
C) the exclusion principle. 
D) an externality.

Question 13

-Refer to the above figure.Medicare subsidies have increased the price of medical services to   .The quantity demanded of medical services is

Accepted Answer

A)    . 
B)    . 
C)    . 
D) undetermined without more information. 
A)    . 
B)    . 
C)    . 
D) undetermined without more information.

Question 14

Consumers are sovereign when

Accepted Answer

A) prices are decided by sellers. 
B) they control the government. 
C) they can prevent market failure. 
D) they have the freedom to decide what they wish to purchase. 
A) prices are decided by sellers. 
B) they control the government. 
C) they can prevent market failure. 
D) they have the freedom to decide what they wish to purchase.

Question 15

Which of the following legal subjects is most concerned with the economic function of the legal system?

Accepted Answer

A) Criminal law 
B) Public goods 
C) Antitrust legislation 
D) Civil rights 
A) Criminal law 
B) Public goods 
C) Antitrust legislation 
D) Civil rights

Question 16

A negative externality is a situation in which

Accepted Answer

A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above. 
A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above.

Question 17

One of the most important characteristics of the price system is that

Accepted Answer

A) consumers are the ones who ultimately decide what is produced. 
B) politicians are the ones who ultimately decide what is produced. 
C) competition among sellers is reduced. 
D) all exchanges are regulated by the government. 
A) consumers are the ones who ultimately decide what is produced. 
B) politicians are the ones who ultimately decide what is produced. 
C) competition among sellers is reduced. 
D) all exchanges are regulated by the government.

Question 18

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

Accepted Answer

When the market fails to provide certain

Question 19

In the spring,I enjoy the fragrance coming from my neighbors' flowers.The fragrance is is an example of

Accepted Answer

A) a negative externality. 
B) a private good. 
C) the need for antitrust legislation. 
D) a free rider. 
A) a negative externality. 
B) a private good. 
C) the need for antitrust legislation. 
D) a free rider.

Question 20

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.

By definition,a government-sponsored good

Inoculations of children against infectious diseases are

-In the above figure,market equilibrium at point E yields the quantity X.The quantity is the socially optimal quantity.Point E indicates that currently there is

Private goods are those goods

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

An example of a market failure is

Medicare

An effluent fee is an example of

Education in the United States is

Which of the following is an example of a negative externality?

When negative externalities exist,the private market equilibrium represents a

An economic activity in which benefits or costs affect third parties is called

-Refer to the above figure.Medicare subsidies have increased the price of medical services to .The quantity demanded of medical services is

Consumers are sovereign when

Which of the following legal subjects is most concerned with the economic function of the legal system?

A negative externality is a situation in which

One of the most important characteristics of the price system is that

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

In the spring,I enjoy the fragrance coming from my neighbors' flowers.The fragrance is is an example of

Government can correct for negative externalities by

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

By definition,a government-sponsored good

Inoculations of children against infectious diseases are

-In the above figure,market equilibrium at point E yields the quantity X.The quantity is the socially optimal quantity.Point E indicates that currently there is

Private goods are those goods

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

An example of a market failure is

Medicare

An effluent fee is an example of

Education in the United States is

Which of the following is an example of a negative externality?

When negative externalities exist,the private market equilibrium represents a

An economic activity in which benefits or costs affect third parties is called

-Refer to the above figure.Medicare subsidies have increased the price of medical services to .The quantity demanded of medical services is

Consumers are sovereign when

Which of the following legal subjects is most concerned with the economic function of the legal system?

A negative externality is a situation in which

One of the most important characteristics of the price system is that

Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?

In the spring,I enjoy the fragrance coming from my neighbors' flowers.The fragrance is is an example of

Government can correct for negative externalities by

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters