Question 1

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

Accepted Answer

Yes,inoculation against chicken pox has

Question 2

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 3

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 4

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of ________ and ________ million immunizations per year.

Accepted Answer

A)  $60; 14 
B)  $40; 14 
C)  $30; 14 
D)  $40; 22 
E)  None of the above answers are correct. 
A)  $60; 14 
B)  $40; 14 
C)  $30; 14 
D)  $40; 22 
E)  None of the above answers are correct.

Question 5

Suppose Julie plants a beautiful garden in her front yard.The benefits of the garden to Julie and to her neighbors equals the

Accepted Answer

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

Question 6

Which of the following is an example of an activity that creates an external cost?
i.a smoker emitting second-hand smoke
ii.sulfur emitting from a smoke stack
iii.throwing garbage on the roadside

Accepted Answer

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

Question 7

If an external benefit is present in the consumption of a good or service,then

Accepted Answer

A)  there can be no external cost. 
B)  the marginal social benefit is greater than the marginal private benefit. 
C)  the marginal social benefit is equal to the marginal private benefit. 
D)  the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit. 
E)  the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit. 
A)  there can be no external cost. 
B)  the marginal social benefit is greater than the marginal private benefit. 
C)  the marginal social benefit is equal to the marginal private benefit. 
D)  the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit. 
E)  the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.

Question 8

A marginal external cost of a product is equal to

Accepted Answer

A)  what the producer has to pay to hire resources to produce another unit. 
B)  the cost someone other than the producer incurs when another unit is produced. 
C)  the cost the producer incurs to produce another unit. 
D)  what the consumer must pay when he or she buys the good or service. 
E)  None of these answers describes a marginal external cost. 
A)  what the producer has to pay to hire resources to produce another unit. 
B)  the cost someone other than the producer incurs when another unit is produced. 
C)  the cost the producer incurs to produce another unit. 
D)  what the consumer must pay when he or she buys the good or service. 
E)  None of these answers describes a marginal external cost.

Question 9

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a tax on gasoline is imposed as shown in the figure,then the total tax revenue earned by the government equals

Accepted Answer

A)  $24 million. 
B)  $16 million. 
C)  $8 million. 
D)  more than $24 million. 
E)  less than $8 million. 
A)  $24 million. 
B)  $16 million. 
C)  $8 million. 
D)  more than $24 million. 
E)  less than $8 million.

Question 10

-The figure above shows the market for education.Education has an external benefit.
a.If the market is competitive and left unregulated,how many students will be enrolled per year?
b.What is the efficient number of students?
c.In the figure,show the effect of a government subsidy that moves the market to the efficient number of students.What is the amount of the subsidy and what tuition must the students pay?

Accepted Answer

a.If the market is competitive and left

Question 11

Which of the following is the best example of a transactions cost?

Accepted Answer

A)  the value of the time spent negotiating a contract 
B)  the price of a new set of tires 
C)  the cost associated with producing a golf club 
D)  the price of labor and materials used to produce a house 
E)  the price of food 
A)  the value of the time spent negotiating a contract 
B)  the price of a new set of tires 
C)  the cost associated with producing a golf club 
D)  the price of labor and materials used to produce a house 
E)  the price of food

Question 12

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.If the government assesses the marginal external cost correctly,what is the amount of the pollution tax that eliminates the inefficiency?

Accepted Answer

A)  $2 per pound 
B)  $3 per pound 
C)  $4 per pound 
D)  $1 per pound. 
E)  None of the above answers is correct. 
A)  $2 per pound 
B)  $3 per pound 
C)  $4 per pound 
D)  $1 per pound. 
E)  None of the above answers is correct.

Question 13

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is ________ and the efficient number of students is ________.

Accepted Answer

A)  13 million students per year; 16 million students per year 
B)  14 million students per year; 16 million students per year 
C)  10 million students per year; 14 million students per year 
D)  10 million students per year; 13 million students per year 
E)  14 million students per year; 10 million students per year 
A)  13 million students per year; 16 million students per year 
B)  14 million students per year; 16 million students per year 
C)  10 million students per year; 14 million students per year 
D)  10 million students per year; 13 million students per year 
E)  14 million students per year; 10 million students per year

Question 14

A marketable permit

Accepted Answer

A)  allows firms to pollute all they want without any cost. 
B)  allows firms to buy and sell the right to pollute at government controlled prices. 
C)  eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D)  allows firms to buy and sell the right to pollute. 
E)  is the Coase theorem solution to pollution. 
A)  allows firms to pollute all they want without any cost. 
B)  allows firms to buy and sell the right to pollute at government controlled prices. 
C)  eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D)  allows firms to buy and sell the right to pollute. 
E)  is the Coase theorem solution to pollution.

Question 15

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,the unregulated market equilibrium occurs at a price of ________ a ton and quantity of ________ tons.

Accepted Answer

A)  $100; 4,000 
B)  $150; 2,000 
C)  $150; 4,000 
D)  $225; 4,000 
E)  $100; 2,000 
A)  $100; 4,000 
B)  $150; 2,000 
C)  $150; 4,000 
D)  $225; 4,000 
E)  $100; 2,000

Question 16

To eliminate the inefficiency resulting from pollution that creates an external cost,the government can impose a pollution tax on producers that is equal to the

Accepted Answer

A)  MSB. 
B)  MC. 
C)  marginal external cost. 
D)  MSC. 
E)  price. 
A)  MSB. 
B)  MC. 
C)  marginal external cost. 
D)  MSC. 
E)  price.

Question 17

-Use the figure above to answer this question.Explain what the marginal social cost curve and the marginal external cost mean.In the figure,if the market is competitive and unregulated,what is the equilibrium price and quantity? What is the efficient amount of output? Illustrate the deadweight loss.

Accepted Answer

@#IMG-DLM& The marginal social cost curve shows th

Question 18

If the marginal social cost of a good is $70 and the marginal external cost is $20,what does the marginal private cost equal?

Accepted Answer

The marginal social cost equals the marg

Question 19

The difference between private cost and social cost is that

Accepted Answer

A)  social cost only considers the external cost borne by society. 
B)  social cost only considers the cost borne by people other than the producer. 
C)  private cost only considers the cost borne by producers of the good. 
D)  social cost also includes any external benefit whereas private cost excludes all external benefits. 
E)  there is no difference; the terms refer to the same cost. 
A)  social cost only considers the external cost borne by society. 
B)  social cost only considers the cost borne by people other than the producer. 
C)  private cost only considers the cost borne by producers of the good. 
D)  social cost also includes any external benefit whereas private cost excludes all external benefits. 
E)  there is no difference; the terms refer to the same cost.

Question 20

A subsidy is

Accepted Answer

A)  the revenue received from the government to produce a good or service by a public authority. 
B)  a voucher received by the government from producers of goods and services. 
C)  a payment that the government makes to private producers of goods and services. 
D)  a tax imposed on the producers of certain goods or services. 
E)  a tax imposed on the consumers of certain goods or services. 
A)  the revenue received from the government to produce a good or service by a public authority. 
B)  a voucher received by the government from producers of goods and services. 
C)  a payment that the government makes to private producers of goods and services. 
D)  a tax imposed on the producers of certain goods or services. 
E)  a tax imposed on the consumers of certain goods or services.

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

When studying pollution and the environment,economists

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

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of and million immunizations per year.

Suppose Julie plants a beautiful garden in her front yard.The benefits of the garden to Julie and to her neighbors equals the

Which of the following is an example of an activity that creates an external cost? i.a smoker emitting second-hand smoke ii.sulfur emitting from a smoke stack iii.throwing garbage on the roadside

If an external benefit is present in the consumption of a good or service,then

A marginal external cost of a product is equal to

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a tax on gasoline is imposed as shown in the figure,then the total tax revenue earned by the government equals

Which of the following is the best example of a transactions cost?

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.If the government assesses the marginal external cost correctly,what is the amount of the pollution tax that eliminates the inefficiency?

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is and the efficient number of students is .

A marketable permit

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,the unregulated market equilibrium occurs at a price of a ton and quantity of tons.

To eliminate the inefficiency resulting from pollution that creates an external cost,the government can impose a pollution tax on producers that is equal to the

-Use the figure above to answer this question.Explain what the marginal social cost curve and the marginal external cost mean.In the figure,if the market is competitive and unregulated,what is the equilibrium price and quantity? What is the efficient amount of output? Illustrate the deadweight loss.

If the marginal social cost of a good is $70 and the marginal external cost is $20,what does the marginal private cost equal?

The difference between private cost and social cost is that

A subsidy is

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

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

When studying pollution and the environment,economists

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

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of ________ and ________ million immunizations per year.

Suppose Julie plants a beautiful garden in her front yard.The benefits of the garden to Julie and to her neighbors equals the

Which of the following is an example of an activity that creates an external cost? i.a smoker emitting second-hand smoke ii.sulfur emitting from a smoke stack iii.throwing garbage on the roadside

If an external benefit is present in the consumption of a good or service,then

A marginal external cost of a product is equal to

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a tax on gasoline is imposed as shown in the figure,then the total tax revenue earned by the government equals

Which of the following is the best example of a transactions cost?

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.If the government assesses the marginal external cost correctly,what is the amount of the pollution tax that eliminates the inefficiency?

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is ________ and the efficient number of students is ________.

A marketable permit

To eliminate the inefficiency resulting from pollution that creates an external cost,the government can impose a pollution tax on producers that is equal to the

If the marginal social cost of a good is $70 and the marginal external cost is $20,what does the marginal private cost equal?

The difference between private cost and social cost is that

A subsidy is

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 annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of and million immunizations per year.

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is and the efficient number of students is .