Question 1

A resource that is nonexcludable and rival in consumption is a

Accepted Answer

A)  private resource. 
B)  public resource. 
C)  common resource. 
D)  government resource. 
A)  private resource. 
B)  public resource. 
C)  common resource. 
D)  government resource.

Question 2

Assuming no externalities exist, if a good's price is less than its marginal cost, then the benefits consumers derive are

Accepted Answer

A)  greater than the cost of resources needed to produce it and less should be produced. 
B)  greater than the cost of resources needed to produce it and more should be produced. 
C)  less than the cost of resources needed to produce it and less should be produced. 
D)  less than the cost of resources needed to produce it and more should be produced. 
A)  greater than the cost of resources needed to produce it and less should be produced. 
B)  greater than the cost of resources needed to produce it and more should be produced. 
C)  less than the cost of resources needed to produce it and less should be produced. 
D)  less than the cost of resources needed to produce it and more should be produced.

Question 3

To find the optimal level of provision for a public good, the government must know

Accepted Answer

A)  the marginal revenue of selling the good. 
B)  the supply curve of the government. 
C)  everyone's preferences. 
D)  the price elasticity of demand of each buyer. 
A)  the marginal revenue of selling the good. 
B)  the supply curve of the government. 
C)  everyone's preferences. 
D)  the price elasticity of demand of each buyer.

Question 4

Instruments that can be used to control overuse of a common resource include

Accepted Answer

A)  standards. 
B)  taxes. 
C)  privatizing the resource. 
D)  all of the above 
A)  standards. 
B)  taxes. 
C)  privatizing the resource. 
D)  all of the above

Question 5

Refer to Scenario 16.2 below to answer the question(s) that follow.
SCENARIO 16.2: The marginal benefit for a particular food is described by MB = 60 - q, where q refers to the quantity of the food. The marginal cost of producing the food is described by MC = 3q. There is a negative externality associated with food production and the marginal social cost of food production is MSC = 5q.
-Refer to Scenario 16.2. The efficient output level is ________ and the efficient price is ________.

Accepted Answer

A)  10 units of food; $20 
B)  10 units of food; $50 
C)  0 units of food; $0 
D)  20 units of food; $40 
A)  10 units of food; $20 
B)  10 units of food; $50 
C)  0 units of food; $0 
D)  20 units of food; $40

Question 6

When the government pays for childhood vaccinations, it is

Accepted Answer

A)  internalizing an external cost. 
B)  using taxes to discourage an external cost. 
C)  subsidizing an external benefit. 
D)  using direct regulation to discourage an external cost. 
A)  internalizing an external cost. 
B)  using taxes to discourage an external cost. 
C)  subsidizing an external benefit. 
D)  using direct regulation to discourage an external cost.

Question 7

If one person's enjoyment of the benefits of a good does not interfere with another's consumption of it, the good is

Accepted Answer

A)  excludable. 
B)  nonexcludable. 
C)  rival in consumption. 
D)  nonrival in consumption. 
A)  excludable. 
B)  nonexcludable. 
C)  rival in consumption. 
D)  nonrival in consumption.

Question 8

As pollution emissions increase, the added cost of one more unit of emissions goes down.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the information in Figure 16.5 below to answer the question(s) that follow.   Figure 16.5
Figure 16.5 shows the marginal benefits of emitting pollution for the only two chemical companies in an industry, Alpha Chemicals and Beta Chemicals. Before any tax on pollution emissions is imposed, each company views pollution as being free.
-Refer to Figure 16.5. The government decides to impose a tax on pollution emissions to cut total emissions in this industry in half, and based on this decision it has set the tax at $100 per ton of emissions. Following the implementation of this tax, Beta will reduce its emissions to ________ tons.

Accepted Answer

A)  25 
B)  50 
C)  75 
D)  100 
A)  25 
B)  50 
C)  75 
D)  100

Question 10

The issuing of tradeable pollution permits is a government-involved approach to dealing with pollution.

Accepted Answer

A) True 
 B)False

Question 11

An example of a common resource is

Accepted Answer

A)  sunlight. 
B)  public grazing land. 
C)  an amusement park. 
D)  cable television. 
A)  sunlight. 
B)  public grazing land. 
C)  an amusement park. 
D)  cable television.

Question 12

The total cost to society of producing an additional unit of a good or service is the marginal

Accepted Answer

A)  external cost. 
B)  damage cost. 
C)  social cost. 
D)  private cost. 
A)  external cost. 
B)  damage cost. 
C)  social cost. 
D)  private cost.

Question 13

We assume the marginal benefit of consumption ________ as we consume fewer units of a good.

Accepted Answer

A)  remains constant 
B)  increases 
C)  decreases 
D)  could either increase or decrease 
A)  remains constant 
B)  increases 
C)  decreases 
D)  could either increase or decrease

Question 14

Refer to the information provided in Figure 16.2 below to answer the question(s) that follow.   Figure 16.2
-Refer to Figure 16.2. The marginal damage cost imposed as a result of producing cars is

Accepted Answer

A)  $5.00 per car. 
B)  $10.00 per car. 
C)  $15.00 per car. 
D)  indeterminate from this information. 
A)  $5.00 per car. 
B)  $10.00 per car. 
C)  $15.00 per car. 
D)  indeterminate from this information.

Question 15

If a profit-maximizing competitive firm ________ compensate society for a negative externality, the firm will choose to produce where price equals marginal cost.

Accepted Answer

A)  does not have to 
B)  is pressured to 
C)  voluntarily chooses to 
D)  is legally bound to 
A)  does not have to 
B)  is pressured to 
C)  voluntarily chooses to 
D)  is legally bound to

Question 16

If the production of a good generates external ________, the government could increase efficiency by ________ production of the good.

Accepted Answer

A)  benefits; taxing 
B)  benefits; subsidizing 
C)  costs; subsidizing 
D)  costs; increasing 
A)  benefits; taxing 
B)  benefits; subsidizing 
C)  costs; subsidizing 
D)  costs; increasing

Question 17

For the efficient level of output to be produced, marginal

Accepted Answer

A)  private cost must equal zero. 
B)  benefit must equal marginal private cost. 
C)  social cost must be zero. 
D)  benefit must equal marginal social cost. 
A)  private cost must equal zero. 
B)  benefit must equal marginal private cost. 
C)  social cost must be zero. 
D)  benefit must equal marginal social cost.

Question 18

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow.   Figure 16.1
-Refer to Figure 16.1. To force this firm to produce the ________ level of output, the government should ________ of $5.00 per bag of fertilizer.

Accepted Answer

A)  efficient; impose a tax 
B)  market; issue a subsidy 
C)  efficient; issue a subsidy 
D)  market; impose a tax 
A)  efficient; impose a tax 
B)  market; issue a subsidy 
C)  efficient; issue a subsidy 
D)  market; impose a tax

Question 19

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow.   Figure 16.1
-Refer to Figure 16.1. What is the total damage imposed as a result of producing the efficient level of fertilizer?

Accepted Answer

A)  $0 
B)  $250 
C)  $300 
D)  $500 
A)  $0 
B)  $250 
C)  $300 
D)  $500

Question 20

According to the Tiebout hypothesis,

Accepted Answer

A)  an optimal (or most efficient) level of output exists for every public good. 
B)  an efficient mix of public goods is produced when local land/housing prices and taxes reflect consumer preferences. 
C)  a good or service is usually so costly that its provision generally does not depend on whether any single person pays. 
D)  under certain conditions, when externalities are present, private parties can arrive at the efficient solution without government involvement. 
A)  an optimal (or most efficient) level of output exists for every public good. 
B)  an efficient mix of public goods is produced when local land/housing prices and taxes reflect consumer preferences. 
C)  a good or service is usually so costly that its provision generally does not depend on whether any single person pays. 
D)  under certain conditions, when externalities are present, private parties can arrive at the efficient solution without government involvement.

A resource that is nonexcludable and rival in consumption is a

Assuming no externalities exist, if a good's price is less than its marginal cost, then the benefits consumers derive are

To find the optimal level of provision for a public good, the government must know

Instruments that can be used to control overuse of a common resource include

When the government pays for childhood vaccinations, it is

If one person's enjoyment of the benefits of a good does not interfere with another's consumption of it, the good is

As pollution emissions increase, the added cost of one more unit of emissions goes down.

The issuing of tradeable pollution permits is a government-involved approach to dealing with pollution.

An example of a common resource is

The total cost to society of producing an additional unit of a good or service is the marginal

We assume the marginal benefit of consumption ________ as we consume fewer units of a good.

Refer to the information provided in Figure 16.2 below to answer the question(s) that follow. Figure 16.2 -Refer to Figure 16.2. The marginal damage cost imposed as a result of producing cars is

If a profit-maximizing competitive firm ________ compensate society for a negative externality, the firm will choose to produce where price equals marginal cost.

If the production of a good generates external , the government could increase efficiency by production of the good.

For the efficient level of output to be produced, marginal

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1 -Refer to Figure 16.1. To force this firm to produce the level of output, the government should of $5.00 per bag of fertilizer.

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1 -Refer to Figure 16.1. What is the total damage imposed as a result of producing the efficient level of fertilizer?

According to the Tiebout hypothesis,

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 16: Externalities, Public Goods, and Common Resources

A resource that is nonexcludable and rival in consumption is a

Assuming no externalities exist, if a good's price is less than its marginal cost, then the benefits consumers derive are

To find the optimal level of provision for a public good, the government must know

Instruments that can be used to control overuse of a common resource include

When the government pays for childhood vaccinations, it is

If one person's enjoyment of the benefits of a good does not interfere with another's consumption of it, the good is

As pollution emissions increase, the added cost of one more unit of emissions goes down.

The issuing of tradeable pollution permits is a government-involved approach to dealing with pollution.

An example of a common resource is

The total cost to society of producing an additional unit of a good or service is the marginal

We assume the marginal benefit of consumption ________ as we consume fewer units of a good.

Refer to the information provided in Figure 16.2 below to answer the question(s) that follow. Figure 16.2 -Refer to Figure 16.2. The marginal damage cost imposed as a result of producing cars is

If a profit-maximizing competitive firm ________ compensate society for a negative externality, the firm will choose to produce where price equals marginal cost.

If the production of a good generates external ________, the government could increase efficiency by ________ production of the good.

For the efficient level of output to be produced, marginal

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1 -Refer to Figure 16.1. To force this firm to produce the ________ level of output, the government should ________ of $5.00 per bag of fertilizer.

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1 -Refer to Figure 16.1. What is the total damage imposed as a result of producing the efficient level of fertilizer?

According to the Tiebout hypothesis,

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

If the production of a good generates external , the government could increase efficiency by production of the good.

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1 -Refer to Figure 16.1. To force this firm to produce the level of output, the government should of $5.00 per bag of fertilizer.