Question 1

The Coase theorem states that if transaction costs are low, the number of parties is small, and property rights are well established

Accepted Answer

A)  the government must intervene to eliminate any externalities in the market. 
B)  private transactions are efficient. 
C)  there will be no pollution. 
D)  Both answers B and C are correct. 
A)  the government must intervene to eliminate any externalities in the market. 
B)  private transactions are efficient. 
C)  there will be no pollution. 
D)  Both answers B and C are correct.

Question 2

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal external cost per ton is

Accepted Answer

A)  zero. 
B)  $30. 
C)  $80. 
D)  $110. 
A)  zero. 
B)  $30. 
C)  $80. 
D)  $110.

Question 3

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

Accepted Answer

A)  large; low 
B)  large; high 
C)  small; low 
D)  small; high 
A)  large; low 
B)  large; high 
C)  small; low 
D)  small; high

Question 4

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the efficient number of students at the college?

Accepted Answer

A)  1,000 
B)  3,000 
C)  4,000 
D)  5,000 
A)  1,000 
B)  3,000 
C)  4,000 
D)  5,000

Question 5

The problem of the commons is the absence of incentives to prevent overuse and depletion of the common resource.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  is achieved. 
B)  can be achieved by giving paper producers a subsidy. 
C)  can be achieved by imposing a Pigovian tax on paper producers. 
D)  cannot be achieved. 
A)  is achieved. 
B)  can be achieved by giving paper producers a subsidy. 
C)  can be achieved by imposing a Pigovian tax on paper producers. 
D)  cannot be achieved.

Question 7

The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights

Accepted Answer

A)  are granted solely to consumers. 
B)  are granted solely to producers. 
C)  are eliminated. 
D)  are granted to either consumers or producers and transactions costs are low. 
A)  are granted solely to consumers. 
B)  are granted solely to producers. 
C)  are eliminated. 
D)  are granted to either consumers or producers and transactions costs are low.

Question 8

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. An efficient allocation of resources occurs at

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

Question 9

Mandating clean technology, cap-and-trade, and taxes are tools that government can use to limit pollution.

Accepted Answer

A) True 
 B)False

Question 10

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals

Accepted Answer

A)  $50 per ton. 
B)  $100 per ton. 
C)  $150 per ton. 
D)  $200 per ton. 
A)  $50 per ton. 
B)  $100 per ton. 
C)  $150 per ton. 
D)  $200 per ton.

Question 11

When a forest is logged, it is possible for the logging to create "soil runoff," a situation in which the soil, no longer protected by trees, erodes and silts a river miles downstream from the logging area. Is soil runoff created by logging in Montana that ruins a river an example of a private cost to the lumbering company or an external cost?

Accepted Answer

The soil runoff is an external cost. The

Question 12

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then the

Accepted Answer

A)  marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B)  marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C)  marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D)  marginal social benefit curve lies $10,000 above the private marginal benefit curve. 
A)  marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B)  marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C)  marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D)  marginal social benefit curve lies $10,000 above the private marginal benefit curve.

Question 13

When producing a good creates pollution, an external cost, and the government imposes a tax equal to the marginal external cost, then

Accepted Answer

A)  the amount of output moves farther away from the efficient amount. 
B)  transaction costs will be high. 
C)  the efficient amount of the good will be produced. 
D)  property rights must have already been established. 
A)  the amount of output moves farther away from the efficient amount. 
B)  transaction costs will be high. 
C)  the efficient amount of the good will be produced. 
D)  property rights must have already been established.

Question 14

Which of the following episodes would most likely contain an externality?

Accepted Answer

A)  You cannot afford to buy groceries. 
B)  You decide to grow your own vegetables in your backyard where no one else can see them. 
C)  You decide to grow flowers in your front yard where everyone else can see them. 
D)  You eat all the vegetables you grow yourself. 
A)  You cannot afford to buy groceries. 
B)  You decide to grow your own vegetables in your backyard where no one else can see them. 
C)  You decide to grow flowers in your front yard where everyone else can see them. 
D)  You eat all the vegetables you grow yourself.

Question 15

Property rights

Accepted Answer

A)  apply to factors of production and to goods and services. 
B)  are legally established titles of ownership that are enforceable in the courts. 
C)  can be part of a solution to the problems of an externality. 
D)  All of the above answers are correct. 
A)  apply to factors of production and to goods and services. 
B)  are legally established titles of ownership that are enforceable in the courts. 
C)  can be part of a solution to the problems of an externality. 
D)  All of the above answers are correct.

Question 16

-Using the above figure, the efficient amount of paper produced is

Accepted Answer

A)  60 million tons. 
B)  80 million tons. 
C)  100 million tons. 
D)  120 million tons. 
A)  60 million tons. 
B)  80 million tons. 
C)  100 million tons. 
D)  120 million tons.

Question 17

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

Accepted Answer

A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit. 
A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit.

Question 18

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that polluters are taxed on the amount of pollution they discharge.

Accepted Answer

A) True 
 B)False

Question 19

When CSU sophomore Cody Clow and his housemates chose not to heed the city's ordinance against unreasonable noise and host a loud party at their off-campus residence last fall, they were confronted and ticketed by police. Fort Collins city code describes unreasonable noise as any sound that will "unreasonably interfere with the enjoyment of life or property." The method the local government used cope with the externality most closely resembles a

Accepted Answer

A)  tax. 
B)  voucher. 
C)  subsidy. 
D)  cap-and-trade policy. 
A)  tax. 
B)  voucher. 
C)  subsidy. 
D)  cap-and-trade policy.

Question 20

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

Accepted Answer

The marginal social cost equals the marg

The Coase theorem states that if transaction costs are low, the number of parties is small, and property rights are well established

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal external cost per ton is

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

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the efficient number of students at the college?

The problem of the commons is the absence of incentives to prevent overuse and depletion of the common resource.

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

The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. An efficient allocation of resources occurs at

Mandating clean technology, cap-and-trade, and taxes are tools that government can use to limit pollution.

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then the

When producing a good creates pollution, an external cost, and the government imposes a tax equal to the marginal external cost, then

Which of the following episodes would most likely contain an externality?

Property rights

-Using the above figure, the efficient amount of paper produced is

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that polluters are taxed on the amount of pollution they discharge.

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

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 Coase theorem states that if transaction costs are low, the number of parties is small, and property rights are well established

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal external cost per ton is

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

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the efficient number of students at the college?

The problem of the commons is the absence of incentives to prevent overuse and depletion of the common resource.

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

The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. An efficient allocation of resources occurs at

Mandating clean technology, cap-and-trade, and taxes are tools that government can use to limit pollution.

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then the

When producing a good creates pollution, an external cost, and the government imposes a tax equal to the marginal external cost, then

Which of the following episodes would most likely contain an externality?

Property rights

-Using the above figure, the efficient amount of paper produced is

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that polluters are taxed on the amount of pollution they discharge.

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

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 Coase Theorem is the proposition that private transactions are efficient if property rights exist, if only a number of parties are involved, and if transactions costs are .