Question 1

To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the

Accepted Answer

A)  MSB. 
B)  MC. 
C)  marginal external cost. 
D)  MSC. 
A)  MSB. 
B)  MC. 
C)  marginal external cost. 
D)  MSC.

Question 2

-In the above table, if the market is perfectly competitive and unregulated, at the equilibrium output level

Accepted Answer

A)  marginal private cost equals the marginal private benefit. 
B)  marginal private cost is less than the marginal private benefit. 
C)  marginal social cost equals the marginal private benefit. 
D)  marginal social cost is greater than the marginal private benefit. 
A)  marginal private cost equals the marginal private benefit. 
B)  marginal private cost is less than the marginal private benefit. 
C)  marginal social cost equals the marginal private benefit. 
D)  marginal social cost is greater than the marginal private benefit.

Question 3

-In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon. When the market for gasoline in Motorland is in equilibrium, the market price of gasoline is ________ the marginal social cost.

Accepted Answer

A)  $1.50 above 
B)  $1.50 below 
C)  equal to 
D)  $1.20 above 
A)  $1.50 above 
B)  $1.50 below 
C)  equal to 
D)  $1.20 above

Question 4

Marginal social cost is equal to

Accepted Answer

A)  marginal private cost plus the marginal external cost. 
B)  the marginal external cost. 
C)  the value of the tax that will make the market efficient. 
D)  the marginal cost imposed on people other than the producer of the good. 
A)  marginal private cost plus the marginal external cost. 
B)  the marginal external cost. 
C)  the value of the tax that will make the market efficient. 
D)  the marginal cost imposed on people other than the producer of the good.

Question 5

For a common resource, the marginal private benefit of the resource is greater than the marginal social benefit.

Accepted Answer

A) True 
 B)False

Question 6

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant.
-In the figure above, if the government provides the efficient amount of education, what is the tuition?

Accepted Answer

A)  $10,000 per year 
B)  $14,000 per year 
C)  $8,000 per year 
D)  $6,000 per year 
A)  $10,000 per year 
B)  $14,000 per year 
C)  $8,000 per year 
D)  $6,000 per year

Question 7

Scientists have said for years cod was so seriously overfished in European Union waters that there was a risk of extinction due to stock collapse. In October 2008, they called for the EU to set the 2008 number of days fishermen are allowed to fish at less than half of 2006 levels. This policy is most like

Accepted Answer

A)  a production quota. 
B)  property right. 
C)  an individual transferable quota. 
D)  marginal social benefit right. 
A)  a production quota. 
B)  property right. 
C)  an individual transferable quota. 
D)  marginal social benefit right.

Question 8

-In the above figure, if the market is competitive and unregulated, output will be

Accepted Answer

A)  zero. 
B)  50 units per week. 
C)  150 units per week. 
D)  250 units per week. 
A)  zero. 
B)  50 units per week. 
C)  150 units per week. 
D)  250 units per week.

Question 9

Those opposed to fracking, a method of extracting natural gas through breaking up underground rocks with chemicals and water, warn that this method might pollute nearby sources of drinking water.
-If this pollution occurs, the marginal social cost equals the

Accepted Answer

A)  marginal external cost. 
B)  private marginal cost. 
C)  sum of the private marginal cost and the marginal external cost. 
D)  private marginal cost minus the marginal external cost. 
A)  marginal external cost. 
B)  private marginal cost. 
C)  sum of the private marginal cost and the marginal external cost. 
D)  private marginal cost minus the marginal external cost.

Question 10

Consider the production of some industrial good that involves air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q).   To arrive at the efficient market equilibrium the government could impose a tax of

Accepted Answer

A)  $3. 
B)  $4. 
C)  $8. 
D)  $9. 
A)  $3. 
B)  $4. 
C)  $8. 
D)  $9.

Question 11

-Keeping in mind the Coase theorem, in the figure above if the pesticide factories own the lake, how much pesticide is produced?

Accepted Answer

A)  300 tons per month 
B)  240 tons per month 
C)  180 tons per month 
D)  360 tons per month 
A)  300 tons per month 
B)  240 tons per month 
C)  180 tons per month 
D)  360 tons per month

Question 12

-In the figure above, if an excise tax is imposed that generates an efficient allocation of resources, then the amount of output will be

Accepted Answer

A)  zero. 
B)  50 units. 
C)  150 units. 
D)  250 units. 
A)  zero. 
B)  50 units. 
C)  150 units. 
D)  250 units.

Question 13

What is the tragedy of the commons?

Accepted Answer

The tragedy of the commons is the absenc

Question 14

Air pollution caused by lead

Accepted Answer

A)  has never been a pollution problem. 
B)  is currently a major pollution problem. 
C)  has mostly been eliminated as a pollution problem. 
D)  is the number one source of pollution today. 
A)  has never been a pollution problem. 
B)  is currently a major pollution problem. 
C)  has mostly been eliminated as a pollution problem. 
D)  is the number one source of pollution today.

Question 15

-The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is

Accepted Answer

A)  zero. 
B)  $4,000. 
C)  $5,000. 
D)  $7,000. 
A)  zero. 
B)  $4,000. 
C)  $5,000. 
D)  $7,000.

Question 16

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government does not intervene, and the colleges are competitive, ________ million students are enrolled, and the tuition is ________ per year.

Accepted Answer

A)  0.8; $7,000 
B)  0.6; $6,000 
C)  0.6; $9,000 
D)  0.8; $5,000 
A)  0.8; $7,000 
B)  0.6; $6,000 
C)  0.6; $9,000 
D)  0.8; $5,000

Question 17

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. If the market for transportation services is competitive and unregulated, the equilibrium quantity is ________ and the equilibrium price is ________.

Accepted Answer

A)  120; $14 
B)  120; $8 
C)  80; $12 
D)  80; $6 
A)  120; $14 
B)  120; $8 
C)  80; $12 
D)  80; $6

Question 18

If an activity has an external benefit, such as education, a tax on that activity can lead to the efficient level of output being produced.

Accepted Answer

A) True 
 B)False

Question 19

In 2008, a man was charged with one count of illegally stocking wild animals, a civil offense. State investigators had accused him of bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land, spawning a feral hog population that has caused thousands of dollars in crop damage to hundreds of farms in the region. What is the externality in this example?

Accepted Answer

A)  bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land 
B)  spawning a feral hog population 
C)  illegally stocking wild animals 
D)  crop damage 
A)  bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land 
B)  spawning a feral hog population 
C)  illegally stocking wild animals 
D)  crop damage

Question 20

A common resource is used efficiently if

Accepted Answer

A)  the output is maximized. 
B)  marginal social benefit equals marginal social cost. 
C)  marginal private benefit equals marginal private cost. 
D)  marginal social benefit is maximized. 
A)  the output is maximized. 
B)  marginal social benefit equals marginal social cost. 
C)  marginal private benefit equals marginal private cost. 
D)  marginal social benefit is maximized.

To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the

-In the above table, if the market is perfectly competitive and unregulated, at the equilibrium output level

Marginal social cost is equal to

For a common resource, the marginal private benefit of the resource is greater than the marginal social benefit.

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant. -In the figure above, if the government provides the efficient amount of education, what is the tuition?

-In the above figure, if the market is competitive and unregulated, output will be

Those opposed to fracking, a method of extracting natural gas through breaking up underground rocks with chemicals and water, warn that this method might pollute nearby sources of drinking water. -If this pollution occurs, the marginal social cost equals the

-Keeping in mind the Coase theorem, in the figure above if the pesticide factories own the lake, how much pesticide is produced?

-In the figure above, if an excise tax is imposed that generates an efficient allocation of resources, then the amount of output will be

What is the tragedy of the commons?

Air pollution caused by lead

-The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government does not intervene, and the colleges are competitive, million students are enrolled, and the tuition is per year.

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. If the market for transportation services is competitive and unregulated, the equilibrium quantity is and the equilibrium price is .

If an activity has an external benefit, such as education, a tax on that activity can lead to the efficient level of output being produced.

A common resource is used efficiently if

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 17: Externalities

To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the

-In the above table, if the market is perfectly competitive and unregulated, at the equilibrium output level

Marginal social cost is equal to

For a common resource, the marginal private benefit of the resource is greater than the marginal social benefit.

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant. -In the figure above, if the government provides the efficient amount of education, what is the tuition?

-In the above figure, if the market is competitive and unregulated, output will be

Those opposed to fracking, a method of extracting natural gas through breaking up underground rocks with chemicals and water, warn that this method might pollute nearby sources of drinking water. -If this pollution occurs, the marginal social cost equals the

-Keeping in mind the Coase theorem, in the figure above if the pesticide factories own the lake, how much pesticide is produced?

-In the figure above, if an excise tax is imposed that generates an efficient allocation of resources, then the amount of output will be

What is the tragedy of the commons?

Air pollution caused by lead

-The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. If the market for transportation services is competitive and unregulated, the equilibrium quantity is ________ and the equilibrium price is ________.

If an activity has an external benefit, such as education, a tax on that activity can lead to the efficient level of output being produced.

A common resource is used efficiently if

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. If the market for transportation services is competitive and unregulated, the equilibrium quantity is and the equilibrium price is .