Question 1

-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. B

Question 2

The marginal cost of production that is borne by the entire society is called the marginal

Accepted Answer

A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost. 
A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost. B

Question 3

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

Accepted Answer

A)  a ton of coal burned in a power plant to produce electricity 
B)  a car accident that crowds a major Los Angeles freeway 
C)  the production of a slice of pizza 
D)  the cleanup of a large lake 
E)  the consumption of a can of Mt. Dew 
A)  a ton of coal burned in a power plant to produce electricity 
B)  a car accident that crowds a major Los Angeles freeway 
C)  the production of a slice of pizza 
D)  the cleanup of a large lake 
E)  the consumption of a can of Mt. Dew D

Question 4

-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 5

The marginal cost of production that is borne by the entire society is called the marginal

Accepted Answer

A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost. 
A)  private cost. 
B)  social cost. 
C)  external cost. 
D)  public cost. 
E)  user cost.

Question 6

A chemical factory dumps waste into a river. The figure above shows the demand curve for the chemical (D) and the marginal private cost (MC) and marginal social cost (MSC) of producing it.
-In the figure above,when the market is unregulated and in equilibrium,marginal social cost ________ marginal benefit,and the quantity of chemical produced is ________.

Accepted Answer

A)  exceeds; above the efficient quantity 
B)  exceeds; below the efficient quantity 
C)  is below; above the efficient quantity 
D)  is below; below the efficient quantity 
E)  equals; efficient 
A)  exceeds; above the efficient quantity 
B)  exceeds; below the efficient quantity 
C)  is below; above the efficient quantity 
D)  is below; below the efficient quantity 
E)  equals; efficient

Question 7

External benefits are the extra

Accepted Answer

A)  benefits a consumer gets from consuming a good. 
B)  costs a producer creates in producing a good. 
C)  benefits that accrue to people other than the consumers. 
D)  costs a producer bears for producing a polluting good. 
E)  benefits a producer obtains for reducing production of a polluting good. 
A)  benefits a consumer gets from consuming a good. 
B)  costs a producer creates in producing a good. 
C)  benefits that accrue to people other than the consumers. 
D)  costs a producer bears for producing a polluting good. 
E)  benefits a producer obtains for reducing production of a polluting good.

Question 8

-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 9

-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 10

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 or 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 or overproduction are both possible depending on whether the external benefit is to consumption or production 
E)  None of the above is correct.

Question 11

Food stamps provided by the government to households are an example of

Accepted Answer

A)  vouchers. 
B)  marginal benefits from producing a good or service. 
C)  marginal cost from producing a good or service. 
D)  marginal external cost. 
E)  a government good. 
A)  vouchers. 
B)  marginal benefits from producing a good or service. 
C)  marginal cost from producing a good or service. 
D)  marginal external cost. 
E)  a government good.

Question 12

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Accepted Answer

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

Question 13

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 14

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

Accepted Answer

A)  total private benefit. 
B)  net gain. 
C)  total external benefit. 
D)  marginal social benefit. 
E)  total Coase benefit. 
A)  total private benefit. 
B)  net gain. 
C)  total external benefit. 
D)  marginal social benefit. 
E)  total Coase benefit.

Question 15

Explain the difference between a positive production externality and a positive consumption externality.

Accepted Answer

A positive production externality occurs

Question 16

If a producer must pay the cost of his or her pollution because property rights have been assigned,then

Accepted Answer

A)  pollution will be completely eliminated. 
B)  the supply curve will shift rightward as the new costs are added. 
C)  the supply curve will shift leftward as the new costs are added. 
D)  consumers will now consume more of the good because the external costs are reduced. 
E)  there is no longer any marginal benefit from the good or service being produced. 
A)  pollution will be completely eliminated. 
B)  the supply curve will shift rightward as the new costs are added. 
C)  the supply curve will shift leftward as the new costs are added. 
D)  consumers will now consume more of the good because the external costs are reduced. 
E)  there is no longer any marginal benefit from the good or service being produced.

Question 17

Which of the following best describes an externality?

Accepted Answer

A)  something that is external to the economy 
B)  a sales tax on a good in addition to the market price 
C)  an effect of a transaction felt by someone other than the buyer or seller 
D)  anything produced in other countries 
E)  a change from what is normal 
A)  something that is external to the economy 
B)  a sales tax on a good in addition to the market price 
C)  an effect of a transaction felt by someone other than the buyer or seller 
D)  anything produced in other countries 
E)  a change from what is normal

Question 18

A private cost is a cost of production that is

Accepted Answer

A)  borne by the producer of a good. 
B)  measured in marginal terms. 
C)  borne by someone other than the producer of a good. 
D)  measured in total terms. 
E)  the same as an external cost. 
A)  borne by the producer of a good. 
B)  measured in marginal terms. 
C)  borne by someone other than the producer of a good. 
D)  measured in total terms. 
E)  the same as an external cost.

Question 19

Which of the following is the best example of a good or service with an external benefit?

Accepted Answer

A)  gasoline 
B)  education 
C)  garbage disposal 
D)  fertilizers 
E)  bread 
A)  gasoline 
B)  education 
C)  garbage disposal 
D)  fertilizers 
E)  bread

Question 20

In a market with an external cost,government action

Accepted Answer

A)  cannot decrease the amount of the deadweight loss from the external cost. 
B)  can sometimes help to achieve an efficient outcome. 
C)  cannot alter firms' cost curves. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  cannot decrease the amount of the deadweight loss from the external cost. 
B)  can sometimes help to achieve an efficient outcome. 
C)  cannot alter firms' cost curves. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

-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?

The marginal cost of production that is borne by the entire society is called the marginal

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

-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

The marginal cost of production that is borne by the entire society is called the marginal

External benefits are the extra

-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 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

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

Food stamps provided by the government to households are an example of

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

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 sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

Explain the difference between a positive production externality and a positive consumption externality.

If a producer must pay the cost of his or her pollution because property rights have been assigned,then

Which of the following best describes an externality?

A private cost is a cost of production that is

Which of the following is the best example of a good or service with an external benefit?

In a market with an external cost,government action

Getting Started

The Usand 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 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?

The marginal cost of production that is borne by the entire society is called the marginal

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

-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

The marginal cost of production that is borne by the entire society is called the marginal

External benefits are the extra

-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 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

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

Food stamps provided by the government to households are an example of

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

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 sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

Explain the difference between a positive production externality and a positive consumption externality.

If a producer must pay the cost of his or her pollution because property rights have been assigned,then

Which of the following best describes an externality?

A private cost is a cost of production that is

Which of the following is the best example of a good or service with an external benefit?

In a market with an external cost,government action

Getting Started

The Usand 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