Question 1

An example of an activity that creates a negative consumption externality is

Accepted Answer

A) logging,which pollutes rivers. 
B) locating beehives next to an orange orchard. 
C) smoking,which harms the health of a bystander. 
D) a flu vaccination. 
E) a sales tax. 
A) logging,which pollutes rivers. 
B) locating beehives next to an orange orchard. 
C) smoking,which harms the health of a bystander. 
D) a flu vaccination. 
E) a sales tax.

Question 2

A patent is an example of

Accepted Answer

A) a subsidy. 
B) a pollution permit. 
C) a voucher. 
D) a tax. 
E) a legal device for creating property rights. 
A) a subsidy. 
B) a pollution permit. 
C) a voucher. 
D) a tax. 
E) a legal device for creating property rights.

Question 3

When the marginal social cost of the production of Good A is greater than the marginal private cost of the production of Good A,then

Accepted Answer

A) a competitive,unregulated market produces less than the efficient quantity of Good A. 
B) a competitive,unregulated market produces the efficient quantity of Good A. 
C) a competitive,unregulated market produces more than the efficient quantity of Good A. 
D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves. 
E) a competitive,unregulated market does not create a deadweight loss. 
A) a competitive,unregulated market produces less than the efficient quantity of Good A. 
B) a competitive,unregulated market produces the efficient quantity of Good A. 
C) a competitive,unregulated market produces more than the efficient quantity of Good A. 
D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves. 
E) a competitive,unregulated market does not create a deadweight loss.

Question 4

Use the figure below to answer the following questions.   Figure 15.3.2
-Refer to Figure 15.3.2.The figure shows the market for good B.What is the efficient quantity of good B?

Accepted Answer

A) 0 units 
B) 3 units 
C) 5 units 
D) 6 units 
E) 9 units 
A) 0 units 
B) 3 units 
C) 5 units 
D) 6 units 
E) 9 units

Question 5

Use the table below to answer the following question.
Table 15.2.3
  
-Refer to Table 15.2.3.The first two columns of the table show the demand schedule for electricity from a coal burning utility;the second and third columns show the utility's cost of producing electricity. The marginal external cost of the pollution created is equal to the marginal cost.
Suppose the government levies a pollution tax such that the utility generates the efficient quantity of electricity.The pollution tax is ________ cents a kilowatt hour.

Accepted Answer

A) 2 
B) 4 
C) 6 
D) 8 
E) 10 
A) 2 
B) 4 
C) 6 
D) 8 
E) 10

Question 6

Use the table below to answer the following questions.
Table 15.2.2
Chemical Fertilizer Market  
-Refer to Table 15.2.2.Production of fertilizer has a marginal

Accepted Answer

A) external cost of $100 a tonne. 
B) social cost of $100 a tonne. 
C) external cost of $30 a tonne. 
D) private cost of $30 a tonne. 
E) external cost of $0. 
A) external cost of $100 a tonne. 
B) social cost of $100 a tonne. 
C) external cost of $30 a tonne. 
D) private cost of $30 a tonne. 
E) external cost of $0.

Question 7

Effective strategies for addressing the problem of negative externalities include

Accepted Answer

A) taxing the profit of polluting companies at twice the rate of non-polluting companies. 
B) imposing taxes on the activity that generates the pollution. 
C) stressing the use of renewable resources. 
D) imposing recycling laws. 
E) closing down a polluting industry. 
A) taxing the profit of polluting companies at twice the rate of non-polluting companies. 
B) imposing taxes on the activity that generates the pollution. 
C) stressing the use of renewable resources. 
D) imposing recycling laws. 
E) closing down a polluting industry.

Question 8

A private subsidy on a good

Accepted Answer

A) is similar to a tax because it decreases the production of the good being subsidized. 
B) increases demand for the good. 
C) punishes those who consume or produce the subsidized good. 
D) has no effect on the quantity of the good produced. 
E) increases production of that good. 
A) is similar to a tax because it decreases the production of the good being subsidized. 
B) increases demand for the good. 
C) punishes those who consume or produce the subsidized good. 
D) has no effect on the quantity of the good produced. 
E) increases production of that good.

Question 9

If the marginal social benefit of a good equals the marginal private benefit of the good,then the marginal external benefit of the good

Accepted Answer

A) equals the marginal private cost. 
B) is zero. 
C) equals the marginal social cost. 
D) equals the marginal social benefit. 
E) is increasing. 
A) equals the marginal private cost. 
B) is zero. 
C) equals the marginal social cost. 
D) equals the marginal social benefit. 
E) is increasing.

Question 10

Environment Canada was created in

Accepted Answer

A) 1985. 
B) 1965. 
C) 1975. 
D) 1995. 
E) 2005. 
A) 1985. 
B) 1965. 
C) 1975. 
D) 1995. 
E) 2005.

Question 11

An externality is

Accepted Answer

A) an additional cost imposed by the government on producers. 
B) an additional gain received by consumers from decisions made by the government. 
C) a cost or a benefit from an action that falls on someone other than the person or firm choosing the action. 
D) a marginal social cost. 
E) the additional amount consumers have to pay to consume an additional amount of a good or service. 
A) an additional cost imposed by the government on producers. 
B) an additional gain received by consumers from decisions made by the government. 
C) a cost or a benefit from an action that falls on someone other than the person or firm choosing the action. 
D) a marginal social cost. 
E) the additional amount consumers have to pay to consume an additional amount of a good or service.

Question 12

When individuals make decisions about how much schooling to obtain,they

Accepted Answer

A) do not consider the personal benefits that education creates. 
B) overvalue the personal benefits that education creates. 
C) overvalue the external benefits that education creates. 
D) do not consider the external benefits that education creates. 
E) set marginal social benefit equal to tuition. 
A) do not consider the personal benefits that education creates. 
B) overvalue the personal benefits that education creates. 
C) overvalue the external benefits that education creates. 
D) do not consider the external benefits that education creates. 
E) set marginal social benefit equal to tuition.

Question 13

A private cost of production is a cost that is borne by the ________ of a good or service. A social cost of production is a cost that is ________.

Accepted Answer

A) consumer;borne by the producer and by everyone else on whom the cost falls 
B) consumer;not borne by the producer but borne by other people 
C) producer;not borne by the producer but borne by other people 
D) producer;borne by the producer and by everyone else on whom the cost falls 
E) producer;borne by the consumer 
A) consumer;borne by the producer and by everyone else on whom the cost falls 
B) consumer;not borne by the producer but borne by other people 
C) producer;not borne by the producer but borne by other people 
D) producer;borne by the producer and by everyone else on whom the cost falls 
E) producer;borne by the consumer

Question 14

A production technology that reduces or prevents pollution is

Accepted Answer

A) anti-pollution technology. 
B) Coase technology. 
C) abatement technology. 
D) cap-and-trade technology. 
E) inefficient. 
A) anti-pollution technology. 
B) Coase technology. 
C) abatement technology. 
D) cap-and-trade technology. 
E) inefficient.

An example of an activity that creates a negative consumption externality is

A patent is an example of

When the marginal social cost of the production of Good A is greater than the marginal private cost of the production of Good A,then

Use the figure below to answer the following questions. Figure 15.3.2 -Refer to Figure 15.3.2.The figure shows the market for good B.What is the efficient quantity of good B?

Use the table below to answer the following questions. Table 15.2.2 Chemical Fertilizer Market -Refer to Table 15.2.2.Production of fertilizer has a marginal

Effective strategies for addressing the problem of negative externalities include

A private subsidy on a good

If the marginal social benefit of a good equals the marginal private benefit of the good,then the marginal external benefit of the good

Environment Canada was created in

An externality is

When individuals make decisions about how much schooling to obtain,they

A private cost of production is a cost that is borne by the of a good or service. A social cost of production is a cost that is .

A production technology that reduces or prevents pollution is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Externalities

An example of an activity that creates a negative consumption externality is

A patent is an example of

When the marginal social cost of the production of Good A is greater than the marginal private cost of the production of Good A,then

Use the figure below to answer the following questions. Figure 15.3.2 -Refer to Figure 15.3.2.The figure shows the market for good B.What is the efficient quantity of good B?

Use the table below to answer the following questions. Table 15.2.2 Chemical Fertilizer Market -Refer to Table 15.2.2.Production of fertilizer has a marginal

Effective strategies for addressing the problem of negative externalities include

A private subsidy on a good

If the marginal social benefit of a good equals the marginal private benefit of the good,then the marginal external benefit of the good

Environment Canada was created in

An externality is

When individuals make decisions about how much schooling to obtain,they

A private cost of production is a cost that is borne by the ________ of a good or service. A social cost of production is a cost that is ________.

A production technology that reduces or prevents pollution is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

A private cost of production is a cost that is borne by the of a good or service. A social cost of production is a cost that is .