Question 1

An example of someone bearing the burden of a negative consumption externality would be

Accepted Answer

A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality. 
A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality.

Question 2

The benefit the consumer of a good or service receives is the

Accepted Answer

A)  social benefit. 
B)  external benefit. 
C)  private benefit. 
D)  public benefit. 
E)  consumption benefit. 
A)  social benefit. 
B)  external benefit. 
C)  private benefit. 
D)  public benefit. 
E)  consumption benefit.

Question 3

If transactions costs are low,then assigning property rights in a market with external costs
i.increases the deadweight loss.
ii.means private transactions are efficient.
iii.means that only consumers must pay the external costs.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i and ii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i and ii

Question 4

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output,a government could impose a ________ that equals the ________ of the pollution.

Accepted Answer

A)  pollution charge; marginal social cost 
B)  pollution charge; marginal external cost 
C)  pollution tax; marginal social cost 
D)  pollution tax; marginal external cost 
E)  pollution subsidy; marginal social cost 
A)  pollution charge; marginal social cost 
B)  pollution charge; marginal external cost 
C)  pollution tax; marginal social cost 
D)  pollution tax; marginal external cost 
E)  pollution subsidy; marginal social cost

Question 5

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $20,000 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $20,000

Question 6

A landfill site produces an obnoxious odor.Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month.If the odor is the only detectable difference between two neighborhoods,the difference in the rent is the ________ of the odor.

Accepted Answer

A)  social cost 
B)  external cost 
C)  private cost 
D)  marginal cost-benefit 
E)  private benefit 
A)  social cost 
B)  external cost 
C)  private cost 
D)  marginal cost-benefit 
E)  private benefit

Question 7

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a subsidy of ________ per student.

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $20,000 
E)  $16,000 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $20,000 
E)  $16,000

Question 8

A example of a good with external benefits is

Accepted Answer

A)  a pizza. 
B)  a dose of flu vaccine. 
C)  a sewing machine. 
D)  an imported good. 
E)  a pair of running shoes. 
A)  a pizza. 
B)  a dose of flu vaccine. 
C)  a sewing machine. 
D)  an imported good. 
E)  a pair of running shoes.

Question 9

Externalities

Accepted Answer

A)  are important in the areas of environment and education. 
B)  only have a negative impact on people. 
C)  deal with issues that are not our internal issues. 
D)  affect the people who are responsible for production. 
E)  are nonexistent in unregulated, competitive markets. 
A)  are important in the areas of environment and education. 
B)  only have a negative impact on people. 
C)  deal with issues that are not our internal issues. 
D)  affect the people who are responsible for production. 
E)  are nonexistent in unregulated, competitive markets.

Question 10

Cap-and-trade refers to

Accepted Answer

A)  capping emissions and issuing tradeable emissions permits. 
B)  capping revenue from selling emissions permits. 
C)  countries trading fishing rights in international waters. 
D)  capping taxes on firms that engage in international trade. 
E)  capping the benefits gained from pollution controls. 
A)  capping emissions and issuing tradeable emissions permits. 
B)  capping revenue from selling emissions permits. 
C)  countries trading fishing rights in international waters. 
D)  capping taxes on firms that engage in international trade. 
E)  capping the benefits gained from pollution controls.

Question 11

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

Accepted Answer

A)  $100 
B)  $150 
C)  $250 
D)  $300 
E)  $50 
A)  $100 
B)  $150 
C)  $250 
D)  $300 
E)  $50

Question 12

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

Accepted Answer

A)  $350 million. 
B)  $250 million. 
C)  $500 million. 
D)  $600 million. 
E)  $37.5 million. 
A)  $350 million. 
B)  $250 million. 
C)  $500 million. 
D)  $600 million. 
E)  $37.5 million.

Question 13

Which of the following is true?

Accepted Answer

A)  MSB = MB + Marginal external benefit 
B)  MB = Marginal external benefit - MSB 
C)  MB = Marginal external benefit + MSC 
D)  MSB = Marginal external cost - marginal external benefit 
E)  MSB = MB + Marginal external benefit - Marginal external cost 
A)  MSB = MB + Marginal external benefit 
B)  MB = Marginal external benefit - MSB 
C)  MB = Marginal external benefit + MSC 
D)  MSB = Marginal external cost - marginal external benefit 
E)  MSB = MB + Marginal external benefit - Marginal external cost

Question 14

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 15

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

Accepted Answer

A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined

Question 16

The production of a good or service by an authority that receives the most of its revenue from the government is referred to as

Accepted Answer

A)  public provision. 
B)  private subsidies. 
C)  vouchers. 
D)  copyrights. 
E)  Coasian production. 
A)  public provision. 
B)  private subsidies. 
C)  vouchers. 
D)  copyrights. 
E)  Coasian production.

Question 17

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is ________ and the efficient number of immunizations per year is ________.

Accepted Answer

A)  14 million; 20 million 
B)  20 million; 22 million 
C)  14 million; 22 million 
D)  14 million; 10 million 
E)  10 million; 14 million 
A)  14 million; 20 million 
B)  20 million; 22 million 
C)  14 million; 22 million 
D)  14 million; 10 million 
E)  10 million; 14 million

Question 18

A marketable permit

Accepted Answer

A)  allows firms to pollute all they want without any cost. 
B)  allows firms to buy and sell the right to pollute at government controlled prices. 
C)  eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D)  allows firms to buy and sell the right to pollute. 
E)  is the Coase theorem solution to pollution. 
A)  allows firms to pollute all they want without any cost. 
B)  allows firms to buy and sell the right to pollute at government controlled prices. 
C)  eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D)  allows firms to buy and sell the right to pollute. 
E)  is the Coase theorem solution to pollution.

Question 19

Three methods the government can use to cope with the external cost from pollution are

Accepted Answer

A)  pollution taxes, subsidies, and outright bans. 
B)  pollution taxes, regulations, and subsidies. 
C)  marketable permits, pollution subsidies, and pollution taxes. 
D)  pollution charges, marketable permits, and pollution limits. 
E)  vouchers, pollution subsidies, and pollution taxes. 
A)  pollution taxes, subsidies, and outright bans. 
B)  pollution taxes, regulations, and subsidies. 
C)  marketable permits, pollution subsidies, and pollution taxes. 
D)  pollution charges, marketable permits, and pollution limits. 
E)  vouchers, pollution subsidies, and pollution taxes.

Question 20

If a product has an external benefit,how does its marginal private benefit compare to its marginal social benefit?

Accepted Answer

A)  Marginal private benefit is less than marginal social benefit. 
B)  Marginal private benefit is greater than marginal social benefit. 
C)  At low quantities, marginal private benefit is less than marginal social benefit but at high quantities, marginal private benefit is greater than marginal social benefit. 
D)  At low quantities, marginal private benefit is greater than marginal social benefit but at high quantities, marginal private benefit is less than marginal social benefit. 
E)  Marginal private benefit cannot be compared to marginal social benefit. 
A)  Marginal private benefit is less than marginal social benefit. 
B)  Marginal private benefit is greater than marginal social benefit. 
C)  At low quantities, marginal private benefit is less than marginal social benefit but at high quantities, marginal private benefit is greater than marginal social benefit. 
D)  At low quantities, marginal private benefit is greater than marginal social benefit but at high quantities, marginal private benefit is less than marginal social benefit. 
E)  Marginal private benefit cannot be compared to marginal social benefit.

An example of someone bearing the burden of a negative consumption externality would be

The benefit the consumer of a good or service receives is the

If transactions costs are low,then assigning property rights in a market with external costs i.increases the deadweight loss. ii.means private transactions are efficient. iii.means that only consumers must pay the external costs.

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output,a government could impose a that equals the of the pollution.

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

A landfill site produces an obnoxious odor.Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month.If the odor is the only detectable difference between two neighborhoods,the difference in the rent is the ________ of the odor.

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a subsidy of ________ per student.

A example of a good with external benefits is

Externalities

Cap-and-trade refers to

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

Which of the following is true?

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

The production of a good or service by an authority that receives the most of its revenue from the government is referred to as

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is and the efficient number of immunizations per year is .

A marketable permit

Three methods the government can use to cope with the external cost from pollution are

If a product has an external benefit,how does its marginal private benefit compare to its marginal social benefit?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Externalities

An example of someone bearing the burden of a negative consumption externality would be

The benefit the consumer of a good or service receives is the

If transactions costs are low,then assigning property rights in a market with external costs i.increases the deadweight loss. ii.means private transactions are efficient. iii.means that only consumers must pay the external costs.

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output,a government could impose a ________ that equals the ________ of the pollution.

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

A landfill site produces an obnoxious odor.Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month.If the odor is the only detectable difference between two neighborhoods,the difference in the rent is the ________ of the odor.

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a subsidy of ________ per student.

A example of a good with external benefits is

Externalities

Cap-and-trade refers to

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals

Which of the following is true?

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

The production of a good or service by an authority that receives the most of its revenue from the government is referred to as

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is ________ and the efficient number of immunizations per year is ________.

A marketable permit

Three methods the government can use to cope with the external cost from pollution are

If a product has an external benefit,how does its marginal private benefit compare to its marginal social benefit?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output,a government could impose a that equals the of the pollution.

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is and the efficient number of immunizations per year is .