Question 1

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

Accepted Answer

A)  2 million 
B)  4 million 
C)  6 million 
D)  more than 6 million 
E)  more than 4 million and less than 6 million 
A)  2 million 
B)  4 million 
C)  6 million 
D)  more than 6 million 
E)  more than 4 million and less than 6 million C

Question 2

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

Accepted Answer

A)  $350 million. 
B)  $250 million. 
C)  $500 million. 
D)  $600 million. 
E)  $37.5 million. 
A)  $350 million. 
B)  $250 million. 
C)  $500 million. 
D)  $600 million. 
E)  $37.5 million. B

Question 3

An externality can be a cost or benefit arising from the production of a good that falls upon

Accepted Answer

A)  consumers but not producers. 
B)  producers but not consumers. 
C)  both the consumer and the producer. 
D)  someone other than the consumer or producer. 
E)  no one, so it goes unpaid. 
A)  consumers but not producers. 
B)  producers but not consumers. 
C)  both the consumer and the producer. 
D)  someone other than the consumer or producer. 
E)  no one, so it goes unpaid. D

Question 4

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Accepted Answer

A)  0¢ 
B)  10¢ 
C)  20¢ 
D)  15¢ 
E)  5¢ 
A)  0¢ 
B)  10¢ 
C)  20¢ 
D)  15¢ 
E)  5¢

Question 5

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC).
-Using the figure above,suppose a subsidy of $15,000 per student is provided to private colleges.Then,the market equilibrium occurs at a tuition of ________ a year and ________ million students.

Accepted Answer

A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20 
A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20

Question 6

Describe some of the external benefits associated with education.What can government do to encourage production of the efficient amount of education?

Accepted Answer

External benefits to education include t

Question 7

Food stamps provided by the government to households are an example of

Accepted Answer

A)  vouchers. 
B)  marginal benefits from producing a good or service. 
C)  marginal cost from producing a good or service. 
D)  marginal external cost. 
E)  a government good. 
A)  vouchers. 
B)  marginal benefits from producing a good or service. 
C)  marginal cost from producing a good or service. 
D)  marginal external cost. 
E)  a government good.

Question 8

A tax on a polluting industry

Accepted Answer

A)  is not desirable because it reduces efficiency. 
B)  leads to less output in this industry. 
C)  causes more resources to be used in the polluting industry. 
D)  shifts the marginal social benefit curve leftward. 
E)  shifts the marginal social benefit curve rightward. 
A)  is not desirable because it reduces efficiency. 
B)  leads to less output in this industry. 
C)  causes more resources to be used in the polluting industry. 
D)  shifts the marginal social benefit curve leftward. 
E)  shifts the marginal social benefit curve rightward.

Question 9

-The figure above shows the market for college education.The efficient quantity of education is

Accepted Answer

A)  0 students. 
B)  4 million students. 
C)  6 million students. 
D)  more than 6 million students. 
E)  more than 4 million students and less than 6 million students. 
A)  0 students. 
B)  4 million students. 
C)  6 million students. 
D)  more than 6 million students. 
E)  more than 4 million students and less than 6 million students.

Question 10

Suppose unregulated production of pesticides results in an equilibrium price and quantity of $400 and 1,000 tons per day,respectively,and a marginal external cost of $10 a ton.
a.If the government were to eliminate the external cost by using pollution charges,what should the pollution charge be set at?
b.If the government were to eliminate the external cost by using taxes,what should the tax equal?
c.Would the government actions described above affect the quantity of pesticides produced? If yes,how? If no,why not?

Accepted Answer

a.$10 a ton
b.$10 a ton
c.Yes,

Question 11

Which of the following is the best example of a good or service with an external benefit?

Accepted Answer

A)  gasoline 
B)  education 
C)  garbage disposal 
D)  fertilizers 
E)  bread 
A)  gasoline 
B)  education 
C)  garbage disposal 
D)  fertilizers 
E)  bread

Question 12

The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because

Accepted Answer

A)  producers cannot measure marginal social cost. 
B)  producers do not pay the external cost. 
C)  the general public does not care about external costs. 
D)  external costs are not a political issue. 
E)  the external cost is paid by consumers rather than producers. 
A)  producers cannot measure marginal social cost. 
B)  producers do not pay the external cost. 
C)  the general public does not care about external costs. 
D)  external costs are not a political issue. 
E)  the external cost is paid by consumers rather than producers.

Question 13

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.

Accepted Answer

A)  0 
B)  150 billion 
C)  200 billion 
D)  100 billion 
E)  more than 200 billion 
A)  0 
B)  150 billion 
C)  200 billion 
D)  100 billion 
E)  more than 200 billion

Question 14

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Accepted Answer

A)  Curve 1 
B)  Curve 2 
C)  the dotted line BC 
D)  the y-axis 
E)  the dotted line AB 
A)  Curve 1 
B)  Curve 2 
C)  the dotted line BC 
D)  the y-axis 
E)  the dotted line AB

Question 15

Joanne rents a TV production studio to produce an extra hour of a TV show.The rent is

Accepted Answer

A)  a private cost and not an external cost. 
B)  an external cost and not a private cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because viewers will benefit from watching the extra hour of the show. 
A)  a private cost and not an external cost. 
B)  an external cost and not a private cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because viewers will benefit from watching the extra hour of the show.

Question 16

Evidence of external costs in the production of a product is present if

Accepted Answer

A)  the price of the product is higher than it should be. 
B)  the production cost increases because of an increase in the minimum wage. 
C)  non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D)  buyers refuse to purchase the product. 
E)  producers pay all of the costs of producing the good or service. 
A)  the price of the product is higher than it should be. 
B)  the production cost increases because of an increase in the minimum wage. 
C)  non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D)  buyers refuse to purchase the product. 
E)  producers pay all of the costs of producing the good or service.

Question 17

A subsidy is

Accepted Answer

A)  the revenue received from the government to produce a good or service by a public authority. 
B)  a voucher received by the government from producers of goods and services. 
C)  a payment that the government makes to private producers of goods and services. 
D)  a tax imposed on the producers of certain goods or services. 
E)  a tax imposed on the consumers of certain goods or services. 
A)  the revenue received from the government to produce a good or service by a public authority. 
B)  a voucher received by the government from producers of goods and services. 
C)  a payment that the government makes to private producers of goods and services. 
D)  a tax imposed on the producers of certain goods or services. 
E)  a tax imposed on the consumers of certain goods or services.

Question 18

What do we mean by "property rights" and why are they important?

Accepted Answer

Property rights are legally established

Question 19

Which of the following is an example of an external benefit?

Accepted Answer

A)  a ton of coal burned in a power plant to produce electricity 
B)  a car accident that crowds a major Los Angeles freeway 
C)  the production of a slice of pizza 
D)  the cleanup of a large lake 
E)  the consumption of a can of Mountain Dew 
A)  a ton of coal burned in a power plant to produce electricity 
B)  a car accident that crowds a major Los Angeles freeway 
C)  the production of a slice of pizza 
D)  the cleanup of a large lake 
E)  the consumption of a can of Mountain Dew

Question 20

If transactions costs are low,then assigning property rights in a market with external costs
i.increases the deadweight loss.
ii.means private transactions are efficient.
iii.means that only consumers must pay the external costs.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i and ii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i and ii

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

An externality can be a cost or benefit arising from the production of a good that falls upon

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Describe some of the external benefits associated with education.What can government do to encourage production of the efficient amount of education?

Food stamps provided by the government to households are an example of

A tax on a polluting industry

-The figure above shows the market for college education.The efficient quantity of education is

Which of the following is the best example of a good or service with an external benefit?

The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Joanne rents a TV production studio to produce an extra hour of a TV show.The rent is

Evidence of external costs in the production of a product is present if

A subsidy is

What do we mean by "property rights" and why are they important?

Which of the following is an example of an external benefit?

If transactions costs are low,then assigning property rights in a market with external costs i.increases the deadweight loss. ii.means private transactions are efficient. iii.means that only consumers must pay the external costs.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Externalities

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

An externality can be a cost or benefit arising from the production of a good that falls upon

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Describe some of the external benefits associated with education.What can government do to encourage production of the efficient amount of education?

Food stamps provided by the government to households are an example of

A tax on a polluting industry

-The figure above shows the market for college education.The efficient quantity of education is

Which of the following is the best example of a good or service with an external benefit?

The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Joanne rents a TV production studio to produce an extra hour of a TV show.The rent is

Evidence of external costs in the production of a product is present if

A subsidy is

What do we mean by "property rights" and why are they important?

Which of the following is an example of an external benefit?

If transactions costs are low,then assigning property rights in a market with external costs i.increases the deadweight loss. ii.means private transactions are efficient. iii.means that only consumers must pay the external costs.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters