Question 1

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. The efficient level of output is

Accepted Answer

A)  2,000 tons. 
B)  3,000 tons. 
C)  4,000 tons. 
D)  5,000 tons. 
A)  2,000 tons. 
B)  3,000 tons. 
C)  4,000 tons. 
D)  5,000 tons.

Question 2

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the

Accepted Answer

A)  allocation of resources is efficient. 
B)  market equilibrium produces 800 tons more than the efficient amount. 
C)  market equilibrium produces 1,600 tons more than the efficient amount. 
D)  market equilibrium produces 800 tons less than the efficient amount. 
A)  allocation of resources is efficient. 
B)  market equilibrium produces 800 tons more than the efficient amount. 
C)  market equilibrium produces 1,600 tons more than the efficient amount. 
D)  market equilibrium produces 800 tons less than the efficient amount.

Question 3

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

Accepted Answer

A) True 
 B)False

Question 4

An example of an activity that generates an external cost is

Accepted Answer

A)  dumping soapsuds into a trout stream. 
B)  national defense services. 
C)  planting flowers along an interstate highway. 
D)  eating an apple. 
A)  dumping soapsuds into a trout stream. 
B)  national defense services. 
C)  planting flowers along an interstate highway. 
D)  eating an apple.

Question 5

-The tables above show the marginal costs and benefits from production of paper. The efficient level of output is ________ of paper.

Accepted Answer

A)  1,600 tons 
B)  2,400 tons 
C)  3,200 tons 
D)  4,000 tons 
A)  1,600 tons 
B)  2,400 tons 
C)  3,200 tons 
D)  4,000 tons

Question 6

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?

Accepted Answer

A)  12 million 
B)  20 million 
C)  16 million 
D)  24 million 
A)  12 million 
B)  20 million 
C)  16 million 
D)  24 million

Question 7

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

Accepted Answer

A)  marginal private benefit; marginal external benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal external benefit; marginal social benefit 
A)  marginal private benefit; marginal external benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal external benefit; marginal social benefit

Question 8

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. 
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.

Question 9

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. The marginal external ________ of the man's movement of feral pigs is ________.

Accepted Answer

A)  costs; negative. 
B)  benefits; positive 
C)  costs; positive. 
D)  benefits; negative 
A)  costs; negative. 
B)  benefits; positive 
C)  costs; positive. 
D)  benefits; negative

Question 10

An externality can be a

Accepted Answer

A)  cost or a benefit. 
B)  benefit but not a cost. 
C)  cost but not a benefit. 
D)  marginal cost but not a total cost. 
A)  cost or a benefit. 
B)  benefit but not a cost. 
C)  cost but not a benefit. 
D)  marginal cost but not a total cost.

Question 11

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax. What is the tax per vehicle mile that will achieve the efficient outcome?

Accepted Answer

A)  $2 
B)  $4 
C)  $6 
D)  $8 
A)  $2 
B)  $4 
C)  $6 
D)  $8

Question 12

Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the

Accepted Answer

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

Question 13

The Coase Theorem is the proposition that if the number of involved parties is low, if property rights ________ and transactions costs are ________, then private transactions are efficient.

Accepted Answer

A)  are nonexistent; low 
B)  exist; high 
C)  are nonexistent; high 
D)  exist; low 
A)  are nonexistent; low 
B)  exist; high 
C)  are nonexistent; high 
D)  exist; low

Question 14

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

Accepted Answer

A)  $6,000 per year 
B)  $12,000 per year 
C)  $18,000 per year 
D)  $27,000 per year 
A)  $6,000 per year 
B)  $12,000 per year 
C)  $18,000 per year 
D)  $27,000 per year

Question 15

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the government subsidizes education, how much should the subsidy be in order to attain the efficient level of enrollment?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000

Question 16

For a common resource, the marginal private cost of the resource is equal to the marginal social cost.

Accepted Answer

A) True 
 B)False

Question 17

How does the government determine the quota amount that will produce an efficient use of a common resource?

Accepted Answer

The government must determine the margin

Question 18

________ is the benefit that a consumer of a good or service receives.

Accepted Answer

A)  Marginal private benefit 
B)  Marginal external benefit 
C)  Marginal social benefit 
D)  Both answers A and B are correct. 
A)  Marginal private benefit 
B)  Marginal external benefit 
C)  Marginal social benefit 
D)  Both answers A and B are correct.

Question 19

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

Accepted Answer

A)  $64,000. 
B)  $56,000. 
C)  $72,000. 
D)  $48,000. 
A)  $64,000. 
B)  $56,000. 
C)  $72,000. 
D)  $48,000.

Question 20

If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

Accepted Answer

The presence of pollution means that the

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. The efficient level of output is

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

An example of an activity that generates an external cost is

-The tables above show the marginal costs and benefits from production of paper. The efficient level of output is ________ of paper.

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called and the benefit the rest of the neighborhood enjoys is called .

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

An externality can be a

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax. What is the tax per vehicle mile that will achieve the efficient outcome?

Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the

The Coase Theorem is the proposition that if the number of involved parties is low, if property rights and transactions costs are , then private transactions are efficient.

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

For a common resource, the marginal private cost of the resource is equal to the marginal social cost.

How does the government determine the quota amount that will produce an efficient use of a common resource?

________ is the benefit that a consumer of a good or service receives.

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

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

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. The efficient level of output is

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

An example of an activity that generates an external cost is

-The tables above show the marginal costs and benefits from production of paper. The efficient level of output is ________ of paper.

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

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

An externality can be a

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax. What is the tax per vehicle mile that will achieve the efficient outcome?

Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the

The Coase Theorem is the proposition that if the number of involved parties is low, if property rights ________ and transactions costs are ________, then private transactions are efficient.

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

For a common resource, the marginal private cost of the resource is equal to the marginal social cost.

How does the government determine the quota amount that will produce an efficient use of a common resource?

________ is the benefit that a consumer of a good or service receives.

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

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

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called and the benefit the rest of the neighborhood enjoys is called .

The Coase Theorem is the proposition that if the number of involved parties is low, if property rights and transactions costs are , then private transactions are efficient.