Question 1

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

Accepted Answer

A)  Coase theorem. 
B)  property rights theorem. 
C)  pollution rights theorem. 
D)  emission rights theorem. 
E)  private-market efficiency theorem. 
A)  Coase theorem. 
B)  property rights theorem. 
C)  pollution rights theorem. 
D)  emission rights theorem. 
E)  private-market efficiency theorem.

Question 2

Cost effective technologies to reduce pollution are most likely to result from

Accepted Answer

A)  marketable pollution permits. 
B)  pollution charges. 
C)  taxes. 
D)  pollution limits. 
E)  quotas. 
A)  marketable pollution permits. 
B)  pollution charges. 
C)  taxes. 
D)  pollution limits. 
E)  quotas.

Question 3

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC).
-Using the figure above,suppose education is provided by public colleges.At what level should tuition be set to ensure the efficient number of students?

Accepted Answer

A)  $10,000 
B)  $5,000 
C)  $20,000 
D)  $25,000 
E)  $15,000 
A)  $10,000 
B)  $5,000 
C)  $20,000 
D)  $25,000 
E)  $15,000

Question 4

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Marginal social cost } \
\text { (dollars per course) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { students }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { private benefit }
\end{array} & \begin{array} { c } 
\text { Marginal social } \
\text { benefit }
\end{array} \
\hline 100 & 4,500 & 20 & 60 \
80 & 4,000 & 40 & 80 \
60 & 3,500 & 60 & 100 \
40 & 3,000 & 80 & 120 \
20 & 2,500 & 100 & 140 \
\hline
\end{array}$$
-The table above gives the marginal social cost (which equals the price),marginal private benefit,and marginal social benefit of students attending Diablo Valley College (DVC)in Concord,California.
a.When 4,500 students attend DVC,what does the marginal external benefit equal?
b.If the market is competitive and left without government intervention,what is the quantity of students that will attend DVC and what will be the price of a course?
c.What is the efficient quantity of students attending DVC?
d.If the government can set the price per course,in order to have the efficient quantity of students attending DVC,what should the government set as the price?

Accepted Answer

a.The marginal external benefit equals $

Question 5

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

Accepted Answer

A)  a negative benefit. 
B)  a public choice impact. 
C)  a positive externality. 
D)  a negative externality. 
E)  a private good. 
A)  a negative benefit. 
B)  a public choice impact. 
C)  a positive externality. 
D)  a negative externality. 
E)  a private good.

Question 6

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

Accepted Answer

A)  ten cents 
B)  nineteen cents 
C)  four cents 
D)  zero cents 
E)  fourteen cents 
A)  ten cents 
B)  nineteen cents 
C)  four cents 
D)  zero cents 
E)  fourteen cents

Question 7

When studying pollution and the environment,economists

Accepted Answer

A)  have no role to play. 
B)  concentrate on the physical aspects of the environment. 
C)  emphasize costs and benefits. 
D)  attempt to reduce pollution at all costs. 
E)  think pollution is good if it occurs when production takes place. 
A)  have no role to play. 
B)  concentrate on the physical aspects of the environment. 
C)  emphasize costs and benefits. 
D)  attempt to reduce pollution at all costs. 
E)  think pollution is good if it occurs when production takes place.

Question 8

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution,the result is

Accepted Answer

A)  a lower price. 
B)  a smaller quantity produced. 
C)  a smaller cost of production. 
D)  a rightward shift of the supply curve. 
E)  leftward shifts of the supply and demand curves. 
A)  a lower price. 
B)  a smaller quantity produced. 
C)  a smaller cost of production. 
D)  a rightward shift of the supply curve. 
E)  leftward shifts of the supply and demand curves.

Question 9

Why does an external cost lead to inefficient overproduction?

Accepted Answer

If there is an external cost,then the ma

Question 10

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the deadweight loss equals

Accepted Answer

A)  0. 
B)  $800,000. 
C)  $1,600,000. 
D)  more than $1,600,000. 
E)  more than $800,000 and less than $1,600,000. 
A)  0. 
B)  $800,000. 
C)  $1,600,000. 
D)  more than $1,600,000. 
E)  more than $800,000 and less than $1,600,000.

Question 11

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.If 5 concerts are put on,then the

Accepted Answer

A)  marginal external cost will be greater than the marginal social cost. 
B)  marginal external cost will be greater than the marginal private cost. 
C)  marginal external cost will equal the marginal private cost. 
D)  marginal social cost will equal the marginal external cost. 
E)  marginal external cost will equal zero. 
A)  marginal external cost will be greater than the marginal social cost. 
B)  marginal external cost will be greater than the marginal private cost. 
C)  marginal external cost will equal the marginal private cost. 
D)  marginal social cost will equal the marginal external cost. 
E)  marginal external cost will equal zero.

Question 12

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

Accepted Answer

A)  inefficient. 
B)  efficient. 
C)  inequitable. 
D)  illegal. 
E)  unnecessary. 
A)  inefficient. 
B)  efficient. 
C)  inequitable. 
D)  illegal. 
E)  unnecessary.

Question 13

-When young students are hungry,they can be disruptive and inattentive in class.Thus,providing lunch to students has external benefits.The figure above represents the market for school lunches before and after government vouchers are issued.
a.What is the unregulated private market equilibrium?
b.What is the efficient quantity of lunches?
c.What is the amount of the voucher necessary to move the economy to the efficient number of lunches?
d.When vouchers are used,what is the dollar price of the lunch that suppliers receive and what is the dollar price that consumers pay when the voucher is used?

Accepted Answer

a.If the market is left unregulated,4 mi

Question 14

Which of the following is an example of a voucher?

Accepted Answer

A)  the postal service 
B)  police services 
C)  Social Security 
D)  food stamps 
E)  a patent on a pharmaceutical drug 
A)  the postal service 
B)  police services 
C)  Social Security 
D)  food stamps 
E)  a patent on a pharmaceutical drug

Question 15

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

Accepted Answer

A)  $16,000 
B)  $13,000 
C)  $11,000 
D)  $5,000 
E)  $7,000 
A)  $16,000 
B)  $13,000 
C)  $11,000 
D)  $5,000 
E)  $7,000

Question 16

-The above figure shows the market for college education in the United States.With no government intervention,the unregulated market equilibrium is ________ because education generates ________.

Accepted Answer

A)  efficient; positive external benefits 
B)  inefficient; positive external benefits 
C)  inefficient; positive external costs 
D)  efficient; positive external costs 
E)  inefficient; public goods 
A)  efficient; positive external benefits 
B)  inefficient; positive external benefits 
C)  inefficient; positive external costs 
D)  efficient; positive external costs 
E)  inefficient; public goods

Question 17

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  None of the above answers is correct. 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  None of the above answers is correct.

Question 18

Does inoculation against chicken pox have both private and external benefits?

Accepted Answer

Yes,inoculation against chicken pox has

Question 19

Which of the following is an example of an external cost?

Accepted Answer

A)  taxes 
B)  the price of a car wash 
C)  pollution 
D)  an electricity bill 
E)  paying a wage that exceeds the minimum wage 
A)  taxes 
B)  the price of a car wash 
C)  pollution 
D)  an electricity bill 
E)  paying a wage that exceeds the minimum wage

Question 20

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

Accepted Answer

A)  insufficient legal power to enforce the controls 
B)  obtaining enough data to determine how much the tax or pollution charge will be 
C)  In some situations, there is no known way to control the external costs. 
D)  political lobbying and voter disagreement 
E)  The Coase theorem points out that taxes and pollution charges work only in the short run and not in the long run. 
A)  insufficient legal power to enforce the controls 
B)  obtaining enough data to determine how much the tax or pollution charge will be 
C)  In some situations, there is no known way to control the external costs. 
D)  political lobbying and voter disagreement 
E)  The Coase theorem points out that taxes and pollution charges work only in the short run and not in the long run.

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

Cost effective technologies to reduce pollution are most likely to result from

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

When studying pollution and the environment,economists

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution,the result is

Why does an external cost lead to inefficient overproduction?

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the deadweight loss equals

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.If 5 concerts are put on,then the

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

Which of the following is an example of a voucher?

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

-The above figure shows the market for college education in the United States.With no government intervention,the unregulated market equilibrium is because education generates .

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Does inoculation against chicken pox have both private and external benefits?

Which of the following is an example of an external cost?

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

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

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

Cost effective technologies to reduce pollution are most likely to result from

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

When studying pollution and the environment,economists

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution,the result is

Why does an external cost lead to inefficient overproduction?

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the deadweight loss equals

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.If 5 concerts are put on,then the

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

Which of the following is an example of a voucher?

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

-The above figure shows the market for college education in the United States.With no government intervention,the unregulated market equilibrium is ________ because education generates ________.

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Does inoculation against chicken pox have both private and external benefits?

Which of the following is an example of an external cost?

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

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

-The above figure shows the market for college education in the United States.With no government intervention,the unregulated market equilibrium is because education generates .