Question 1

-The above figure shows the market for steel ingots. The optimal quantity of pollution

Accepted Answer

A) is 0 units. 
B) is 50 units. 
C) is 100 units. 
D) cannot be determined from the information provided. 
A) is 0 units. 
B) is 50 units. 
C) is 100 units. 
D) cannot be determined from the information provided.

Question 2

In general, an externality is created when

Accepted Answer

A) people are affected (other than by price)by a transaction which they were not part of. 
B) firms produce a product of low quality and consumers don't like it. 
C) firms have to pay for pollution the environment. 
D) the government subsidizes education. 
A) people are affected (other than by price)by a transaction which they were not part of. 
B) firms produce a product of low quality and consumers don't like it. 
C) firms have to pay for pollution the environment. 
D) the government subsidizes education.

Question 3

The exclusive privilege to use an asset is called a(n)

Accepted Answer

A) property right. 
B) exclusive use agreement. 
C) property privilege. 
D) right to work privilege. 
A) property right. 
B) exclusive use agreement. 
C) property privilege. 
D) right to work privilege.

Question 4

Suppose twenty neighbors share a park. One of the neighbors, Al, leaves trash in the park. This bothers the other neighbors. According to Coase's Theorem, assigning the property rights to the park to Al

Accepted Answer

A) will achieve the socially optimal quantity of trash. 
B) will result in zero trash being dumped in the park. 
C) might still not achieve the social optimum since coordinating the other nineteen neighbors can be costly. 
D) is unfair. 
A) will achieve the socially optimal quantity of trash. 
B) will result in zero trash being dumped in the park. 
C) might still not achieve the social optimum since coordinating the other nineteen neighbors can be costly. 
D) is unfair.

Question 5

Regulatory capture is where

Accepted Answer

A) governments take over monopolies through use of regulation. 
B) firms impose barriers to entry on regulators. 
C) regulators of an industry look out for the industry instead of society. 
D) the government taxes the profits of monopolies such that all producer surplus goes to the government. 
A) governments take over monopolies through use of regulation. 
B) firms impose barriers to entry on regulators. 
C) regulators of an industry look out for the industry instead of society. 
D) the government taxes the profits of monopolies such that all producer surplus goes to the government.

Question 6

Which of the following would be considered open-access common property?

Accepted Answer

A) A library 
B) The world wide web 
C) A company gym 
D) Broadcast television 
A) A library 
B) The world wide web 
C) A company gym 
D) Broadcast television

Question 7

Which of the following is a Pareto improvement?

Accepted Answer

A) A monopolist loses its monopoly when a government policy allows another firm to enter the market, resulting in lower prices and higher quantity available for consumers. 
B) A government policy is implemented that results in the middle class being better off, and the very rich only have to pay a little bit more in taxes. 
C) A government policy removes a market failure. 
D) None of the above. 
A) A monopolist loses its monopoly when a government policy allows another firm to enter the market, resulting in lower prices and higher quantity available for consumers. 
B) A government policy is implemented that results in the middle class being better off, and the very rich only have to pay a little bit more in taxes. 
C) A government policy removes a market failure. 
D) None of the above.

Question 8

Positive externalities are created when

Accepted Answer

A) other consumers reduce their demand for coffee and price thereby declines. 
B) farmers spray pesticide in their fields and it washes into the local river after the first rainstorm. 
C) your neighbor plants beautiful trees and flowers in her yard. 
D) you purchase the "Mona Lisa" and lock it in a vault. 
A) other consumers reduce their demand for coffee and price thereby declines. 
B) farmers spray pesticide in their fields and it washes into the local river after the first rainstorm. 
C) your neighbor plants beautiful trees and flowers in her yard. 
D) you purchase the "Mona Lisa" and lock it in a vault.

Question 9

Reparations for slavery in the United States would

Accepted Answer

A) be consistent with the Pareto principle. 
B) be inconsistent with the Pareto principle. 
C) have nothing to do with the Pareto principle. 
D) be unconstitutional. 
A) be consistent with the Pareto principle. 
B) be inconsistent with the Pareto principle. 
C) have nothing to do with the Pareto principle. 
D) be unconstitutional.

Question 10

Optimal price regulation sets price equal to

Accepted Answer

A) marginal cost. 
B) average variable cost. 
C) average cost. 
D) minimum average cost. 
A) marginal cost. 
B) average variable cost. 
C) average cost. 
D) minimum average cost.

Question 11

A firm charging prices below marginal cost is said to be engaged in

Accepted Answer

A) price fixing. 
B) predatory pricing. 
C) a cartel. 
D) irrational behavior. 
A) price fixing. 
B) predatory pricing. 
C) a cartel. 
D) irrational behavior.

Question 12

A patent is a property right, which gives the owner

Accepted Answer

A) the right to sell and/or license the invention. 
B) the ability to make the knowledge of how to make the invention rival. 
C) a guaranteed profit. 
D) All of the above. 
A) the right to sell and/or license the invention. 
B) the ability to make the knowledge of how to make the invention rival. 
C) a guaranteed profit. 
D) All of the above.

Question 13

If a change is a Pareto improvement, then

Accepted Answer

A) we also achieve Pareto efficiency. 
B) consumer surplus is maximized. 
C) it also passes the cost-benefit test. 
D) the distributional effect is likely to be regressive. 
A) we also achieve Pareto efficiency. 
B) consumer surplus is maximized. 
C) it also passes the cost-benefit test. 
D) the distributional effect is likely to be regressive.

Question 14

If Pareto efficiency has been achieved,

Accepted Answer

A) there are no additional Pareto improvements that can be made. 
B) surplus is maximized. 
C) economic efficiency is also achieved. 
D) All of the above. 
A) there are no additional Pareto improvements that can be made. 
B) surplus is maximized. 
C) economic efficiency is also achieved. 
D) All of the above.

Question 15

The socially optimal amount of pollution is

Accepted Answer

A) zero. 
B) greater than zero. 
C) indeterminant. 
D) unattainable. 
A) zero. 
B) greater than zero. 
C) indeterminant. 
D) unattainable.

Question 16

A rival good

Accepted Answer

A) is one that is used up as it is consumed. 
B) is one that rival firms are trying to obtain. 
C) is exclusive. 
D) cannot be shared. 
A) is one that is used up as it is consumed. 
B) is one that rival firms are trying to obtain. 
C) is exclusive. 
D) cannot be shared.

Question 17

The government forcing a monopoly telecommunications company to allow other firms to use its cables is an attempt to

Accepted Answer

A) regulate prices. 
B) decrease the monopoly market power by eliminating a natural monopoly. 
C) decrease the monopoly market power by increasing competition. 
D) None of the above. 
A) regulate prices. 
B) decrease the monopoly market power by eliminating a natural monopoly. 
C) decrease the monopoly market power by increasing competition. 
D) None of the above.

Question 18

The efficient quantity of a pure public good occurs when the marginal cost of producing that good equals the

Accepted Answer

A) marginal benefit to the median voter. 
B) marginal benefit to each individual. 
C) sum of all individual marginal benefits. 
D) sum of all individual marginal benefits divided by the number of voters. 
A) marginal benefit to the median voter. 
B) marginal benefit to each individual. 
C) sum of all individual marginal benefits. 
D) sum of all individual marginal benefits divided by the number of voters.

Question 19

One way for the government to eliminate a negative externality is to

Accepted Answer

A) charge an emissions fee. 
B) set an emissions standard. 
C) levy an effluent charge. 
D) All of the above. 
A) charge an emissions fee. 
B) set an emissions standard. 
C) levy an effluent charge. 
D) All of the above.

Question 20

If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then

Accepted Answer

A) a shortage will exist. 
B) a surplus will exist. 
C) producer surplus is maximized. 
D) consumer surplus is maximized. 
A) a shortage will exist. 
B) a surplus will exist. 
C) producer surplus is maximized. 
D) consumer surplus is maximized.

-The above figure shows the market for steel ingots. The optimal quantity of pollution

In general, an externality is created when

The exclusive privilege to use an asset is called a(n)

Suppose twenty neighbors share a park. One of the neighbors, Al, leaves trash in the park. This bothers the other neighbors. According to Coase's Theorem, assigning the property rights to the park to Al

Regulatory capture is where

Which of the following would be considered open-access common property?

Which of the following is a Pareto improvement?

Positive externalities are created when

Reparations for slavery in the United States would

Optimal price regulation sets price equal to

A firm charging prices below marginal cost is said to be engaged in

A patent is a property right, which gives the owner

If a change is a Pareto improvement, then

If Pareto efficiency has been achieved,

The socially optimal amount of pollution is

A rival good

The government forcing a monopoly telecommunications company to allow other firms to use its cables is an attempt to

The efficient quantity of a pure public good occurs when the marginal cost of producing that good equals the

One way for the government to eliminate a negative externality is to

If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters

Exam 16: Government and Business

-The above figure shows the market for steel ingots. The optimal quantity of pollution

In general, an externality is created when

The exclusive privilege to use an asset is called a(n)

Suppose twenty neighbors share a park. One of the neighbors, Al, leaves trash in the park. This bothers the other neighbors. According to Coase's Theorem, assigning the property rights to the park to Al

Regulatory capture is where

Which of the following would be considered open-access common property?

Which of the following is a Pareto improvement?

Positive externalities are created when

Reparations for slavery in the United States would

Optimal price regulation sets price equal to

A firm charging prices below marginal cost is said to be engaged in

A patent is a property right, which gives the owner

If a change is a Pareto improvement, then

If Pareto efficiency has been achieved,

The socially optimal amount of pollution is

A rival good

The government forcing a monopoly telecommunications company to allow other firms to use its cables is an attempt to

The efficient quantity of a pure public good occurs when the marginal cost of producing that good equals the

One way for the government to eliminate a negative externality is to

If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters