Exam 6: Market Efficiency and Market Failure

Unlike pollution taxes, what do pollution permits allow governments to do?

Why might an economist argue that Canadian national defence should be funded through tax revenues?

If a negative externality results from the refining of oil, what can be said of the cost of production as seen by the oil refinery?

Which of the following best explains the source of consumer surplus for Good A?

If firms were required to pay the full social costs of the production of goods, including both private and external costs, other things being equal, which of the following would likely occur?

Graphically, how is consumer surplus measured?

Which of the following would lead to the creation of some consumer surplus?

The schedule below represents the willingness of a typical vintner to produce wine in a year. Suppose there are 100 identical producers in the market. TABLE 6-4 -Refer to Table 6-34. If the market price of wine is $20, what is the total producer surplus equal to?

Why is national defence commonly provided by the government, while food is NOT?

Marginal utility is the change in total utility that results from which of the following?

What are public goods?

A public good or service can be consumed by paying and nonpaying customers alike.

In the absence of government action, why would the private market probably NOT provide as much police protection as is socially desirable?

What are costs that accrue to the total population referred to as?

A cost that spills over onto individuals not directly involved in an activity is called a positive externality.

If the marginal utility per dollar spent for Good A is higher than the marginal utility per dollar spent on Good B, a consumer should increase their consumption of Good A in order to achieve consumer equilibrium.

What is the difference between private and social costs?

If the production of a particular good involves significant external costs, what might the government do to force the externality to be internalized?

If consumers were able to receive the full social benefits associated with the consumption of goods involving positive externalities, other things being equal, which of the following would likely occur?

Louise loves to eat chocolate. However, every piece of chocolate that Louise eats provides her with less total utility. What can we conclude about Louise's utility from this information?