Question 1

Suppose scientific research generates external benefits.Without government intervention,the market for scientific research would

Accepted Answer

A)  produce the efficient amount. 
B)  produce more than the efficient amount. 
C)  produce some research, but less than the efficient amount. 
D)  produce zero research. 
E)  either produce more than or less than the efficient amount depending on whether the external benefit is on the production or consumption of the research. 
A)  produce the efficient amount. 
B)  produce more than the efficient amount. 
C)  produce some research, but less than the efficient amount. 
D)  produce zero research. 
E)  either produce more than or less than the efficient amount depending on whether the external benefit is on the production or consumption of the research.

Question 2

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of steel } \
\text { (millions of tons } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text { Marginal benefit } \
\text { (dollars per ton) }
\end{array} & \begin{array} { c } 
\text { Marginal social } \
\text { cost (dollars per } \
\text { ton) }
\end{array} \
\hline 5 & 40 & 20 \
\hline 10 & 35 & 25 \
\hline 15 & 30 & 30 \
\hline 20 & 25 & 35 \
\hline 25 & 20 & 40 \
\hline
\end{array}$$
-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

Accepted Answer

A)  5 
B)  10 
C)  15 
D)  20 
E)  25 
A)  5 
B)  10 
C)  15 
D)  20 
E)  25

Question 3

-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 equilibrium price of private education is

Accepted Answer

A)  $12,000. 
B)  $16,000. 
C)  $20,000. 
D)  $4,000. 
E)  $6,000. 
A)  $12,000. 
B)  $16,000. 
C)  $20,000. 
D)  $4,000. 
E)  $6,000.

Question 4

Education has an external benefit.So to achieve the efficient level of education,an education voucher must equal the difference between the

Accepted Answer

A)  marginal (private) cost and the marginal social benefit. 
B)  marginal (private) benefit and the marginal social benefit. 
C)  marginal social benefit and the marginal (private) cost. 
D)  dollar price and marginal (private) cost. 
E)  marginal (private) cost and the marginal social cost. 
A)  marginal (private) cost and the marginal social benefit. 
B)  marginal (private) benefit and the marginal social benefit. 
C)  marginal social benefit and the marginal (private) cost. 
D)  dollar price and marginal (private) cost. 
E)  marginal (private) cost and the marginal social cost.

Question 5

Individuals making decisions about how much to purchase of a product with an external benefit base their decisions on which of the following?

Accepted Answer

A)  the price and marginal private benefit 
B)  the economically efficient output 
C)  the price and the marginal social benefit 
D)  the size of the deadweight loss 
E)  the size of the external benefit and the price 
A)  the price and marginal private benefit 
B)  the economically efficient output 
C)  the price and the marginal social benefit 
D)  the size of the deadweight loss 
E)  the size of the external benefit and the price

Question 6

When government provides a good with an external benefit,to attain efficiency the price paid by consumers is set equal to the

Accepted Answer

A)  marginal private benefit at the efficient level of output. 
B)  marginal private cost at the efficient level of output. 
C)  amount paid by taxpayers. 
D)  market-determined price. 
E)  marginal external benefit at the efficient level of output. 
A)  marginal private benefit at the efficient level of output. 
B)  marginal private cost at the efficient level of output. 
C)  amount paid by taxpayers. 
D)  market-determined price. 
E)  marginal external benefit at the efficient level of output.

Question 7

Evidence of external costs in the production of a product is present if

Accepted Answer

A)  the price of the product is higher than it should be. 
B)  the production cost increases because of an increase in the minimum wage. 
C)  non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D)  buyers refuse to purchase the product. 
E)  producers pay all of the costs of producing the good or service. 
A)  the price of the product is higher than it should be. 
B)  the production cost increases because of an increase in the minimum wage. 
C)  non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D)  buyers refuse to purchase the product. 
E)  producers pay all of the costs of producing the good or service.

Question 8

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

Accepted Answer

A)  2 million 
B)  4 million 
C)  6 million 
D)  more than 6 million 
E)  more than 4 million and less than 6 million 
A)  2 million 
B)  4 million 
C)  6 million 
D)  more than 6 million 
E)  more than 4 million and less than 6 million

Question 9

The additional benefit that Marvin gets from being vaccinated against the flu is known as the

Accepted Answer

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

Question 10

What is marginal external cost? Give an example.

Accepted Answer

Marginal external cost is the additional

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.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year,then the marginal benefit will

Accepted Answer

A)  exceed the marginal social cost. 
B)  equal the marginal private cost. 
C)  be less than the marginal social cost. 
D)  will equal the marginal social cost. 
E)  None of the above answers is correct. 
A)  exceed the marginal social cost. 
B)  equal the marginal private cost. 
C)  be less than the marginal social cost. 
D)  will equal the marginal social cost. 
E)  None of the above answers is correct.

Question 12

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 13

A payment made by the government to private producers of roads and libraries would be an example of

Accepted Answer

A)  a subsidy. 
B)  a copyright. 
C)  a voucher. 
D)  public provision. 
E)  a Coase payment. 
A)  a subsidy. 
B)  a copyright. 
C)  a voucher. 
D)  public provision. 
E)  a Coase payment.

Question 14

How has air quality changed in the United States since 1980?

Accepted Answer

Generally air quality in the U

Question 15

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

Accepted Answer

A)  underproduction compared to the efficient level 
B)  overproduction compared to the efficient level 
C)  Production equals the efficient level. 
D)  Underproduction and overproduction are both possible depending on whether the external benefit is to consumption or production. 
E)  None of the above is correct. 
A)  underproduction compared to the efficient level 
B)  overproduction compared to the efficient level 
C)  Production equals the efficient level. 
D)  Underproduction and overproduction are both possible depending on whether the external benefit is to consumption or production. 
E)  None of the above is correct.

Question 16

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

Accepted Answer

A)  exceed; above the efficient quantity 
B)  exceed; below the efficient quantity 
C)  be below; above the efficient quantity 
D)  be below; below the efficient quantity 
E)  equal; efficient 
A)  exceed; above the efficient quantity 
B)  exceed; below the efficient quantity 
C)  be below; above the efficient quantity 
D)  be below; below the efficient quantity 
E)  equal; efficient

Question 17

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a voucher 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 18

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 19

If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output,which of the following occurs?
i.The supply curve shifts leftward.
ii.The price increases.
iii.The quantity produced decreases.

Accepted Answer

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

Question 20

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

Accepted Answer

A)  0¢ per kilowatt. 
B)  10¢ per kilowatt. 
C)  20¢ per kilowatt. 
D)  15¢ per kilowatt. 
E)  5¢ per kilowatt. 
A)  0¢ per kilowatt. 
B)  10¢ per kilowatt. 
C)  20¢ per kilowatt. 
D)  15¢ per kilowatt. 
E)  5¢ per kilowatt.

Suppose scientific research generates external benefits.Without government intervention,the market for scientific research would

-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 equilibrium price of private education is

Education has an external benefit.So to achieve the efficient level of education,an education voucher must equal the difference between the

Individuals making decisions about how much to purchase of a product with an external benefit base their decisions on which of the following?

When government provides a good with an external benefit,to attain efficiency the price paid by consumers is set equal to the

Evidence of external costs in the production of a product is present if

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

The additional benefit that Marvin gets from being vaccinated against the flu is known as the

What is marginal external cost? Give an example.

-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.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year,then the marginal benefit will

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.

A payment made by the government to private producers of roads and libraries would be an example of

How has air quality changed in the United States since 1980?

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would marginal benefit,and the quantity of chemical produced would be .

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

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

If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output,which of the following occurs? i.The supply curve shifts leftward. ii.The price increases. iii.The quantity produced decreases.

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

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

Suppose scientific research generates external benefits.Without government intervention,the market for scientific research would

-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 equilibrium price of private education is

Education has an external benefit.So to achieve the efficient level of education,an education voucher must equal the difference between the

Individuals making decisions about how much to purchase of a product with an external benefit base their decisions on which of the following?

When government provides a good with an external benefit,to attain efficiency the price paid by consumers is set equal to the

Evidence of external costs in the production of a product is present if

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

The additional benefit that Marvin gets from being vaccinated against the flu is known as the

What is marginal external cost? Give an example.

-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.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year,then the marginal benefit will

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.

A payment made by the government to private producers of roads and libraries would be an example of

How has air quality changed in the United States since 1980?

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

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

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

If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output,which of the following occurs? i.The supply curve shifts leftward. ii.The price increases. iii.The quantity produced decreases.

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

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

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would marginal benefit,and the quantity of chemical produced would be .