Question 1

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

Accepted Answer

The statement is false.Externa

Question 2

For a good whose production creates an external cost,the efficient quantity of output is

Accepted Answer

A)  where the market demand curve and the market supply curve intersect. 
B)  where the marginal social cost curve and marginal benefit curve intersect. 
C)  as low as possible. 
D)  zero. 
E)  the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible. 
A)  where the market demand curve and the market supply curve intersect. 
B)  where the marginal social cost curve and marginal benefit curve intersect. 
C)  as low as possible. 
D)  zero. 
E)  the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible.

Question 3

-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.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

Accepted Answer

A)  marginal external cost equals $30,000. 
B)  marginal social cost equals $30,000. 
C)  marginal external cost equals the marginal private cost. 
D)  marginal external cost equals $40,000. 
E)  marginal external cost equals $10,000. 
A)  marginal external cost equals $30,000. 
B)  marginal social cost equals $30,000. 
C)  marginal external cost equals the marginal private cost. 
D)  marginal external cost equals $40,000. 
E)  marginal external cost equals $10,000.

Question 4

Explain the difference between marginal social benefit and marginal external benefit.

Accepted Answer

Marginal social benefit equals the margi

Question 5

-The figure above shows the market for education,a good possessing an external benefit.In order to attain the efficient number of students,a government subsidy must equal ________ per student.

Accepted Answer

A)  $2,000 
B)  $8,000 
C)  $6,000 
D)  $10,000 
E)  $16,000 
A)  $2,000 
B)  $8,000 
C)  $6,000 
D)  $10,000 
E)  $16,000

Question 6

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution.If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution,then

Accepted Answer

A)  Firm B sells its permits to Firm A for a price above $6,000. 
B)  Firm A sells its permits to Firm B for a price below $6,000. 
C)  Firm A sells its permits to Firm B for a price above $6,000. 
D)  Firm B sells its permits to Firm A for a price below $6,000. 
E)  neither Firm A nor Firm B sells permits because neither has extra permits. 
A)  Firm B sells its permits to Firm A for a price above $6,000. 
B)  Firm A sells its permits to Firm B for a price below $6,000. 
C)  Firm A sells its permits to Firm B for a price above $6,000. 
D)  Firm B sells its permits to Firm A for a price below $6,000. 
E)  neither Firm A nor Firm B sells permits because neither has extra permits.

Question 7

In part,the Coase theorem is a proposition about

Accepted Answer

A)  assigning property rights. 
B)  measuring private costs. 
C)  subsidizing external benefits. 
D)  taxing external costs. 
E)  how increasing transactions costs can reduce deadweight losses. 
A)  assigning property rights. 
B)  measuring private costs. 
C)  subsidizing external benefits. 
D)  taxing external costs. 
E)  how increasing transactions costs can reduce deadweight losses.

Question 8

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.If the marginal external cost is $10 per ton at every quantity of steel produced,the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

Accepted Answer

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

Question 9

Which of the following is true regarding pollution charges?
i.They force a polluter to pay a price for its pollution.
ii.They are based on the marginal external cost of pollution.
iii.The fee that produces the efficient amount of pollution is easily determined.

Accepted Answer

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

Question 10

Vouchers given to consumers

Accepted Answer

A)  increase the demand for a good. 
B)  decrease the demand for a good. 
C)  increase the supply of a good. 
D)  decrease the supply of a good. 
E)  increase both the demand for the good and the supply of the good. 
A)  increase the demand for a good. 
B)  decrease the demand for a good. 
C)  increase the supply of a good. 
D)  decrease the supply of a good. 
E)  increase both the demand for the good and the supply of the good.

Question 11

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

Accepted Answer

The equilibrium quantity of coal burned

Question 12

-The figure above shows the market for polio vaccination in Pakistan.Polio vaccination confers an external benefit because one person's vaccination makes it less likely that other people will catch polio.
a.If the market is competitive and left unregulated,how many doses of vaccine will be administered?
b.If the Melinda and Bill Gates Foundation underwrites the cost of the vaccine by paying for a large fraction of the preparation and delivery cost,what will happen to the number of doses administered? Why?

Accepted Answer

a.If the market is competitive and left

Question 13

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the market is competitive and unregulated,the equilibrium price is ________ per kilowatt hour and the equilibrium quantity is ________ billions of kilowatt hours per day.

Accepted Answer

A)  10¢; 200 
B)  15¢; 150 
C)  20¢; 200 
D)  20¢; 100 
E)  7.5¢; 150 
A)  10¢; 200 
B)  15¢; 150 
C)  20¢; 200 
D)  20¢; 100 
E)  7.5¢; 150

Question 14

-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 15

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 16

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

Accepted Answer

A)  8; $150 
B)  8; $300 
C)  10; $250 
D)  10; $100 
E)  10; $150 
A)  8; $150 
B)  8; $300 
C)  10; $250 
D)  10; $100 
E)  10; $150

Question 17

What is the Coase theorem? What conditions need to be present for this theorem to work?

Accepted Answer

The Coase theorem states that if propert

Question 18

-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 19

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

Accepted Answer

A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons. 
A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons.

Question 20

If there is no external cost,then marginal social cost

Accepted Answer

A)  increases as output increases. 
B)  decreases as output increases. 
C)  is constant regardless of the level of output. 
D)  is unrelated to output levels. 
E)  first increases and then decreases as output increases. 
A)  increases as output increases. 
B)  decreases as output increases. 
C)  is constant regardless of the level of output. 
D)  is unrelated to output levels. 
E)  first increases and then decreases as output increases.

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

For a good whose production creates an external cost,the efficient quantity of output is

-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.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

Explain the difference between marginal social benefit and marginal external benefit.

-The figure above shows the market for education,a good possessing an external benefit.In order to attain the efficient number of students,a government subsidy must equal ________ per student.

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution.If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution,then

In part,the Coase theorem is a proposition about

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.If the marginal external cost is $10 per ton at every quantity of steel produced,the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

Which of the following is true regarding pollution charges? i.They force a polluter to pay a price for its pollution. ii.They are based on the marginal external cost of pollution. iii.The fee that produces the efficient amount of pollution is easily determined.

Vouchers given to consumers

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the market is competitive and unregulated,the equilibrium price is per kilowatt hour and the equilibrium quantity is billions of kilowatt hours per day.

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

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is units and the equilibrium price is per unit.

What is the Coase theorem? What conditions need to be present for this theorem to work?

-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.

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

If there is no external cost,then marginal social cost

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

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

For a good whose production creates an external cost,the efficient quantity of output is

-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.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

Explain the difference between marginal social benefit and marginal external benefit.

-The figure above shows the market for education,a good possessing an external benefit.In order to attain the efficient number of students,a government subsidy must equal ________ per student.

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution.If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution,then

In part,the Coase theorem is a proposition about

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.If the marginal external cost is $10 per ton at every quantity of steel produced,the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

Which of the following is true regarding pollution charges? i.They force a polluter to pay a price for its pollution. ii.They are based on the marginal external cost of pollution. iii.The fee that produces the efficient amount of pollution is easily determined.

Vouchers given to consumers

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

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

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

What is the Coase theorem? What conditions need to be present for this theorem to work?

-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.

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

If there is no external cost,then marginal social cost

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

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is units and the equilibrium price is per unit.