Question 1

Figure 10-11
  
-Refer to Figure 10-11.Which of the following magnitudes is constant over all units of output?

Accepted Answer

A)  the private value of the last unit of output that was produced and sold 
B)  the social value of the last unit of output that was produced and sold 
C)  the external benefit of the last unit of output that was produced and sold 
D)  the private cost of the last unit of output that was produced and sold 
A)  the private value of the last unit of output that was produced and sold 
B)  the social value of the last unit of output that was produced and sold 
C)  the external benefit of the last unit of output that was produced and sold 
D)  the private cost of the last unit of output that was produced and sold

Question 2

Despite the appealing logic of the Coase theorem,private actors often fail to resolve on their own the problems caused by externalities.

Accepted Answer

A) True 
 B)False

Question 3

Why can't private individuals always internalize an externality without the help of government?

Accepted Answer

A)  Legal restrictions prevent side payments between individuals. 
B)  Transactions costs may be too high. 
C)  Side payments between individuals are inefficient. 
D)  Side payments between individuals are insufficient. 
A)  Legal restrictions prevent side payments between individuals. 
B)  Transactions costs may be too high. 
C)  Side payments between individuals are inefficient. 
D)  Side payments between individuals are insufficient.

Question 4

Figure 10-8
  
-Refer to Figure 10-8.What is the socially-optimal quantity of output in this market?

Accepted Answer

A)  8 units 
B)  Between 8 and 10 units 
C)  10 units 
D)  More than 10 units 
A)  8 units 
B)  Between 8 and 10 units 
C)  10 units 
D)  More than 10 units

Question 5

Figure 10-9

-Refer to Figure 10-9.Which graph represents a market with a negative externality?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Both (b) and (c) are correct. 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Both (b) and (c) are correct.

Question 6

Figure 10-9

-Refer to Figure 10-9,Panel (b)and Panel (c).The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack.Therefore,a government policy that internalized the externality would move the quantity of smokestack scrubbers installed from point

Accepted Answer

A)  Q2 to point Q3. 
B)  Q3 to point Q2. 
C)  Q4 to point Q5. 
D)  Q5 to point Q4. 
A)  Q2 to point Q3. 
B)  Q3 to point Q2. 
C)  Q4 to point Q5. 
D)  Q5 to point Q4.

Question 7

Corrective taxes are more efficient than regulations for keeping the environment clean.

Accepted Answer

A) True 
 B)False

Question 8

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

Accepted Answer

A) True 
 B)False

Question 9

A corrective tax

Accepted Answer

A)  allocates pollution to those factories that face the highest cost of reducing it. 
B)  is a form of regulation. 
C)  works well for all types of externalities. 
D)  is inferior to regulatory policy according to most economists. 
A)  allocates pollution to those factories that face the highest cost of reducing it. 
B)  is a form of regulation. 
C)  works well for all types of externalities. 
D)  is inferior to regulatory policy according to most economists.

Question 10

Organizers of an outdoor concert in a park surrounded by residential neighborhoods are likely to consider the noise and traffic cost to residential neighborhoods when they assess the financial viability of the concert venture.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not correct?

Accepted Answer

A)  Markets allocate scarce resources with the forces of supply and demand. 
B)  The equilibrium of supply and demand is typically an efficient allocation of resources. 
C)  Governments can sometimes improve market outcomes. 
D)  Externalities cannot be positive. 
A)  Markets allocate scarce resources with the forces of supply and demand. 
B)  The equilibrium of supply and demand is typically an efficient allocation of resources. 
C)  Governments can sometimes improve market outcomes. 
D)  Externalities cannot be positive.

Question 12

Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of $103.
  
-Refer to Table 10-6.If the government charged a fee of $99 per unit of pollution,how many units of pollution would the firms eliminate altogether?

Accepted Answer

A)  9 
B)  12 
C)  15 
D)  16 
A)  9 
B)  12 
C)  15 
D)  16

Question 13

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Accepted Answer

A)  the market-based solution is less costly to society. 
B)  the market-based solution can result in a greater reduction in pollution. 
C)  the market-based solution raises revenue for the government. 
D)  all of the above. 
A)  the market-based solution is less costly to society. 
B)  the market-based solution can result in a greater reduction in pollution. 
C)  the market-based solution raises revenue for the government. 
D)  all of the above.

Question 14

Which of the following statements is correct?

Accepted Answer

A)  Gasoline taxes are an example of an EPA regulation. 
B)  Gasoline taxes are higher in many European countries than in the United States. 
C)  Gasoline taxes contribute to global warming. 
D)  Gasoline taxes are an example of a command-and-control policy. 
A)  Gasoline taxes are an example of an EPA regulation. 
B)  Gasoline taxes are higher in many European countries than in the United States. 
C)  Gasoline taxes contribute to global warming. 
D)  Gasoline taxes are an example of a command-and-control policy.

Question 15

Which of the following statements is correct?

Accepted Answer

A)  Automotive manufacturers prefer stricter fuel economy regulations to higher gasoline taxes. 
B)  Higher gasoline taxes have provided a market-based incentive for Europeans to buy more fuel-efficient vehicles. 
C)  Higher gasoline taxes have had no effect on the U.S. demand for gasoline because the demand for gasoline is perfectly inelastic. 
D)  Fuel efficiency regulations are more effective than gasoline taxes in reducing the demand for gasoline in the United States and Europe. 
A)  Automotive manufacturers prefer stricter fuel economy regulations to higher gasoline taxes. 
B)  Higher gasoline taxes have provided a market-based incentive for Europeans to buy more fuel-efficient vehicles. 
C)  Higher gasoline taxes have had no effect on the U.S. demand for gasoline because the demand for gasoline is perfectly inelastic. 
D)  Fuel efficiency regulations are more effective than gasoline taxes in reducing the demand for gasoline in the United States and Europe.

Question 16

Table 10-5
The following table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67.
  
-Refer to Table 10-5.If the government wanted to reduce pollution from 16 units to 6 units,which of the following fees per unit of pollution would achieve that goal?

Accepted Answer

A)  $67 
B)  $68 
C)  $81 
D)  $83 
A)  $67 
B)  $68 
C)  $81 
D)  $83

Question 17

Figure 10-11
  
-Refer to Figure 10-11.Which of the following statements is correct?

Accepted Answer

A)  The private value of the 280th unit of output is $10. 
B)  The social value of the 280th unit of output is $28. 
C)  The external benefit of the 280th unit of output is $18. 
D)  All of the above are correct. 
A)  The private value of the 280th unit of output is $10. 
B)  The social value of the 280th unit of output is $28. 
C)  The external benefit of the 280th unit of output is $18. 
D)  All of the above are correct.

Question 18

Figure 10-4
  
-Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 19

If only a few people are affected by an externality,then it is likely that

Accepted Answer

A)  corrective taxes will provide the most efficient solution to the externality. 
B)  command-and-control regulation will provide the most efficient solution to the externality. 
C)  a private solution to the inefficiency will occur. 
D)  a private solution will be very difficult to negotiate. 
A)  corrective taxes will provide the most efficient solution to the externality. 
B)  command-and-control regulation will provide the most efficient solution to the externality. 
C)  a private solution to the inefficiency will occur. 
D)  a private solution will be very difficult to negotiate.

Question 20

Which of the following is an example of a positive externality?

Accepted Answer

A)  A college student buys a new car when she graduates. 
B)  The mayor of a small town plants flowers in the city park. 
C)  Local high school teachers have pizza delivered every Friday for lunch. 
D)  An avid fisherman buys new fishing gear for his next fishing trip. 
A)  A college student buys a new car when she graduates. 
B)  The mayor of a small town plants flowers in the city park. 
C)  Local high school teachers have pizza delivered every Friday for lunch. 
D)  An avid fisherman buys new fishing gear for his next fishing trip.

Figure 10-11 -Refer to Figure 10-11.Which of the following magnitudes is constant over all units of output?

Despite the appealing logic of the Coase theorem,private actors often fail to resolve on their own the problems caused by externalities.

Why can't private individuals always internalize an externality without the help of government?

Figure 10-8 -Refer to Figure 10-8.What is the socially-optimal quantity of output in this market?

Figure 10-9 -Refer to Figure 10-9.Which graph represents a market with a negative externality?

Figure 10-9 -Refer to Figure 10-9,Panel (b)and Panel (c).The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack.Therefore,a government policy that internalized the externality would move the quantity of smokestack scrubbers installed from point

Corrective taxes are more efficient than regulations for keeping the environment clean.

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

A corrective tax

Organizers of an outdoor concert in a park surrounded by residential neighborhoods are likely to consider the noise and traffic cost to residential neighborhoods when they assess the financial viability of the concert venture.

Which of the following is not correct?

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Which of the following statements is correct?

Which of the following statements is correct?

Figure 10-11 -Refer to Figure 10-11.Which of the following statements is correct?

Figure 10-4 -Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be

If only a few people are affected by an externality,then it is likely that

Which of the following is an example of a positive externality?

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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Exam 10: Externalities.

Figure 10-11 -Refer to Figure 10-11.Which of the following magnitudes is constant over all units of output?

Despite the appealing logic of the Coase theorem,private actors often fail to resolve on their own the problems caused by externalities.

Why can't private individuals always internalize an externality without the help of government?

Figure 10-8 -Refer to Figure 10-8.What is the socially-optimal quantity of output in this market?

Figure 10-9 -Refer to Figure 10-9.Which graph represents a market with a negative externality?

Figure 10-9 -Refer to Figure 10-9,Panel (b)and Panel (c).The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack.Therefore,a government policy that internalized the externality would move the quantity of smokestack scrubbers installed from point

Corrective taxes are more efficient than regulations for keeping the environment clean.

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

A corrective tax

Organizers of an outdoor concert in a park surrounded by residential neighborhoods are likely to consider the noise and traffic cost to residential neighborhoods when they assess the financial viability of the concert venture.

Which of the following is not correct?

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Which of the following statements is correct?

Which of the following statements is correct?

Figure 10-11 -Refer to Figure 10-11.Which of the following statements is correct?

Figure 10-4 -Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be

If only a few people are affected by an externality,then it is likely that

Which of the following is an example of a positive externality?

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters