Question 1

If vouchers for a good or service given to consumers,then the supply curve ________ and the demand curve ________.

Accepted Answer

A)  shifts leftward; shifts leftward 
B)  shifts leftward; shifts rightward 
C)  shifts rightward; shifts rightward 
D)  does not shift; shifts rightward 
E)  shifts rightward; does not shift 
A)  shifts leftward; shifts leftward 
B)  shifts leftward; shifts rightward 
C)  shifts rightward; shifts rightward 
D)  does not shift; shifts rightward 
E)  shifts rightward; does not shift

Question 2

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

Accepted Answer

A)  always equals the benefit the consumer derives from that good or service. 
B)  equals the cost borne by people other than the producer. 
C)  is the marginal private cost. 
D)  is the external cost. 
E)  is the marginal social cost. 
A)  always equals the benefit the consumer derives from that good or service. 
B)  equals the cost borne by people other than the producer. 
C)  is the marginal private cost. 
D)  is the external cost. 
E)  is the marginal social cost.

Question 3

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because,without government intervention,________ would be consumed and ________ would be produced.

Accepted Answer

A)  more than the efficient amount; more than the efficient amount 
B)  more than the efficient amount; less than the efficient amount 
C)  less than the efficient amount; more than the efficient amount 
D)  less than the efficient amount; less than the efficient amount 
E)  the efficient amount; the efficient amount 
A)  more than the efficient amount; more than the efficient amount 
B)  more than the efficient amount; less than the efficient amount 
C)  less than the efficient amount; more than the efficient amount 
D)  less than the efficient amount; less than the efficient amount 
E)  the efficient amount; the efficient amount

Question 4

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

Accepted Answer

A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward. 
A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward.

Question 5

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

Accepted Answer

A private subsidy increases the producti

Question 6

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

Accepted Answer

A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02 
E)  $0.80 
A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02 
E)  $0.80

Question 7

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

Accepted Answer

A)  $640 million 
B)  $320 million 
C)  $240 million 
D)  More than $640 million 
E)  Zero because the government has taxed the firms out of business. 
A)  $640 million 
B)  $320 million 
C)  $240 million 
D)  More than $640 million 
E)  Zero because the government has taxed the firms out of business.

Question 8

Which of the following government actions is appropriate in a market with an external benefit?

Accepted Answer

A)  taxes 
B)  vouchers 
C)  marketable permits 
D)  setting a tax equal to the transactions costs 
E)  price ceiling 
A)  taxes 
B)  vouchers 
C)  marketable permits 
D)  setting a tax equal to the transactions costs 
E)  price ceiling

Question 9

The Coase theorem deals with the problem of pollution by

Accepted Answer

A)  giving the government regulatory power over polluters. 
B)  making all polluters stop polluting. 
C)  establishing and enforcing private property rights. 
D)  having the government take over ownership of all polluting processes. 
E)  allowing the government to set the proper emission charge. 
A)  giving the government regulatory power over polluters. 
B)  making all polluters stop polluting. 
C)  establishing and enforcing private property rights. 
D)  having the government take over ownership of all polluting processes. 
E)  allowing the government to set the proper emission charge.

Question 10

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).
-In the figure above,suppose the government provides vouchers worth $15,000 per student per year.Then the market equilibrium occurs at a tuition of ________ a year and ________ million students.

Accepted Answer

A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20 
A)  $10,000; 15 
B)  $25,000; 15 
C)  $15,000; 15 
D)  $15,000; 7.5 
E)  $20,000; 20

Question 11

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 12

-The table above gives the private costs and external costs of producing paper.
a.Complete the table by finding the marginal social cost at each level of production.
b.If the market is competitive and is left unregulated and 400 tons of paper are produced,what is the price of a ton of paper?
c.If the government imposes a tax equal to the external cost at each level of production,what price would be charged if 400 tons are produced?

Accepted Answer

@#IMG-DLM& 
a.The table above completes the margin

Question 13

The marginal external cost and marginal private cost

Accepted Answer

A)  are all borne by the seller. 
B)  are opportunity costs. 
C)  when added, equal the sum of the marginal private benefit plus the marginal social benefit at equilibrium. 
D)  are regulated by the government. 
E)  must always be equal in equilibrium. 
A)  are all borne by the seller. 
B)  are opportunity costs. 
C)  when added, equal the sum of the marginal private benefit plus the marginal social benefit at equilibrium. 
D)  are regulated by the government. 
E)  must always be equal in equilibrium.

Question 14

-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 15

If tuition at a college is $30,000 and the external benefit of graduating from this college is $10,000,then
i.in the absence of any government intervention,the number of students graduating is less than the efficient number.
ii.the government could increase the number of graduates by giving the college a $10,000 subsidy per student.
iii.the government could increase the number of graduates by giving the students $10,000 vouchers.

Accepted Answer

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

Question 16

Marginal social benefit equals

Accepted Answer

A)  marginal external benefit. 
B)  marginal private benefit. 
C)  marginal private benefit minus marginal external benefit. 
D)  marginal private benefit plus marginal external benefit. 
E)  marginal external benefit minus marginal private benefit. 
A)  marginal external benefit. 
B)  marginal private benefit. 
C)  marginal private benefit minus marginal external benefit. 
D)  marginal private benefit plus marginal external benefit. 
E)  marginal external benefit minus marginal private benefit.

Question 17

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

Accepted Answer

A)  total deadweight loss when there is not the illustrated subsidy. 
B)  remaining deadweight loss when there is the illustrated subsidy. 
C)  gain in efficiency from the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  consumer surplus with the illustrated subsidy. 
A)  total deadweight loss when there is not the illustrated subsidy. 
B)  remaining deadweight loss when there is the illustrated subsidy. 
C)  gain in efficiency from the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  consumer surplus with the illustrated subsidy.

Question 18

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers 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.

Question 19

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Accepted Answer

A)  the marginal cost. 
B)  represented by the demand curve. 
C)  represented by the supply curve. 
D)  the marginal external cost. 
E)  the marginal social cost. 
A)  the marginal cost. 
B)  represented by the demand curve. 
C)  represented by the supply curve. 
D)  the marginal external cost. 
E)  the marginal social cost.

Question 20

Which of the following actions would most likely have an external benefit?

Accepted Answer

A)  eating a peanut butter sandwich 
B)  throwing trash out your car window as you drive to class 
C)  sleeping 
D)  attending college 
E)  developing a better marketing strategy for Honda 
A)  eating a peanut butter sandwich 
B)  throwing trash out your car window as you drive to class 
C)  sleeping 
D)  attending college 
E)  developing a better marketing strategy for Honda

If vouchers for a good or service given to consumers,then the supply curve and the demand curve .

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because,without government intervention, would be consumed and would be produced.

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

Which of the following government actions is appropriate in a market with an external benefit?

The Coase theorem deals with the problem of pollution by

The marginal external cost and marginal private cost

Marginal social benefit equals

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

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

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Which of the following actions would most likely have an external benefit?

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

If vouchers for a good or service given to consumers,then the supply curve ________ and the demand curve ________.

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because,without government intervention,________ would be consumed and ________ would be produced.

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

Which of the following government actions is appropriate in a market with an external benefit?

The Coase theorem deals with the problem of pollution by

The marginal external cost and marginal private cost

Marginal social benefit equals

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

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

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Which of the following actions would most likely have an external benefit?

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

If vouchers for a good or service given to consumers,then the supply curve and the demand curve .

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because,without government intervention, would be consumed and would be produced.