Question 1

When production of a good results in an external cost,the unregulated competitive market equilibrium quantity is

Accepted Answer

A)  the efficient level of output. 
B)  greater than the efficient level of output. 
C)  not zero but is less than the efficient level of output. 
D)  unattainable. 
E)  zero. 
A)  the efficient level of output. 
B)  greater than the efficient level of output. 
C)  not zero but is less than the efficient level of output. 
D)  unattainable. 
E)  zero.

Question 2

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market?
i.Overproduction relative to the efficient level will occur.
ii.The market price is less than the marginal social cost at the equilibrium quantity.
iii.A deadweight loss occurs.

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 3

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

Accepted Answer

A)  only a private cost. 
B)  only an external cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because the neighbors get to hear the band. 
A)  only a private cost. 
B)  only an external cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because the neighbors get to hear the band.

Question 4

-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 deadweight loss equals

Accepted Answer

A)  0. 
B)  $800,000. 
C)  $1,600,000. 
D)  more than $1,600,000. 
E)  more than $800,000 and less than $1,600,000. 
A)  0. 
B)  $800,000. 
C)  $1,600,000. 
D)  more than $1,600,000. 
E)  more than $800,000 and less than $1,600,000.

Question 5

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is ________ and the efficient number of immunizations per year is ________.

Accepted Answer

A)  14 million; 20 million 
B)  20 million; 22 million 
C)  14 million; 22 million 
D)  14 million; 10 million 
E)  10 million; 14 million 
A)  14 million; 20 million 
B)  20 million; 22 million 
C)  14 million; 22 million 
D)  14 million; 10 million 
E)  10 million; 14 million

Question 6

An example of someone bearing the burden of a negative consumption externality would be

Accepted Answer

A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality. 
A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality.

Question 7

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 a subsidy is provided to private colleges.What amount of subsidy will ensure the efficient number of students?

Accepted Answer

A)  $10,000 
B)  $25,000 
C)  $15,000 
D)  $5,000 
E)  $20,000 
A)  $10,000 
B)  $25,000 
C)  $15,000 
D)  $5,000 
E)  $20,000

Question 8

-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 number of students being privately educated is ________ and the efficient quantity is ________.

Accepted Answer

A)  0 students; 400 students 
B)  400 students; 400 students 
C)  400 students; 600 students 
D)  600 students; 400 students 
E)  600 students; 600 students 
A)  0 students; 400 students 
B)  400 students; 400 students 
C)  400 students; 600 students 
D)  600 students; 400 students 
E)  600 students; 600 students

Question 9

-The table above gives the marginal social cost (which equals the price),marginal private benefit,and marginal social benefit of students attending Diablo Valley College (DVC)in Concord,California.
a.When 4,500 students attend DVC,what does the marginal external benefit equal?
b.If the market is competitive and left without government intervention,what is the quantity of students that will attend DVC and what will be the price of a course?
c.What is the efficient quantity of students attending DVC?
d.If the government can set the price per course,in order to have the efficient quantity of students attending DVC,what should the government set as the price?

Accepted Answer

a.The marginal external benefit equals $

Question 10

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal external cost when 100 billion kilowatt hours are produced is

Accepted Answer

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

Question 11

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a $10 subsidy to providers of immunizations,the number of people immunized is ________.

Accepted Answer

A)  20 million per year. 
B)  exactly 10 million per year. 
C)  between 15 and 20 million per year. 
D)  less than 10 million per year. 
E)  more than 10 million and less than 15 million. 
A)  20 million per year. 
B)  exactly 10 million per year. 
C)  between 15 and 20 million per year. 
D)  less than 10 million per year. 
E)  more than 10 million and less than 15 million.

Question 12

-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 number of students being privately educated is

Accepted Answer

A)  0 students. 
B)  200 students. 
C)  400 students. 
D)  600 students. 
E)  None of the above answers is correct. 
A)  0 students. 
B)  200 students. 
C)  400 students. 
D)  600 students. 
E)  None of the above answers is correct.

Question 13

The marginal social cost of producing a good or service is the

Accepted Answer

A)  cost of producing an additional unit borne by the producer. 
B)  cost of producing an additional unit borne by people other than the producer. 
C)  sum of the marginal private cost and the marginal external cost. 
D)  same as marginal external cost. 
E)  sum of the marginal private cost and the marginal external cost minus the marginal social benefit. 
A)  cost of producing an additional unit borne by the producer. 
B)  cost of producing an additional unit borne by people other than the producer. 
C)  sum of the marginal private cost and the marginal external cost. 
D)  same as marginal external cost. 
E)  sum of the marginal private cost and the marginal external cost minus the marginal social benefit.

Question 14

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

Accepted Answer

A)  zero. 
B)  the area d. 
C)  the area a + c. 
D)  the area b + c. 
E)  the area b + d. 
A)  zero. 
B)  the area d. 
C)  the area a + c. 
D)  the area b + c. 
E)  the area b + d.

Question 15

A noisy party that keeps neighbors awake is an example of a

Accepted Answer

A)  negative production externality. 
B)  positive production externality. 
C)  negative consumption externality. 
D)  positive consumption externality. 
E)  Both answers B and C are correct. 
A)  negative production externality. 
B)  positive production externality. 
C)  negative consumption externality. 
D)  positive consumption externality. 
E)  Both answers B and C are correct.

Question 16

If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500,then the

Accepted Answer

A)  marginal benefit of a ton of cement will equal $4,000. 
B)  total cost of producing a ton of cement is $7,500. 
C)  marginal external cost of producing a ton of cement is $500. 
D)  marginal external cost of producing a ton of cement is $7,500. 
E)  marginal external cost of producing a ton of cement is $4,000. 
A)  marginal benefit of a ton of cement will equal $4,000. 
B)  total cost of producing a ton of cement is $7,500. 
C)  marginal external cost of producing a ton of cement is $500. 
D)  marginal external cost of producing a ton of cement is $7,500. 
E)  marginal external cost of producing a ton of cement is $4,000.

Question 17

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

Accepted Answer

A)  $30 
B)  $20 
C)  $40 
D)  $60 
E)  $70 
A)  $30 
B)  $20 
C)  $40 
D)  $60 
E)  $70

Question 18

-The figure above shows the costs and benefits associated with producing paper.What is the efficient level of output?

Accepted Answer

A)  0 
B)  4 tons 
C)  6 tons 
D)  More than 6 tons 
E)  None of the above answers is correct. 
A)  0 
B)  4 tons 
C)  6 tons 
D)  More than 6 tons 
E)  None of the above answers is correct.

Question 19

Which of the following is true?

Accepted Answer

A)  MSB = MB + Marginal external benefit. 
B)  MB = Marginal external benefit - MSB. 
C)  MB = Marginal external benefit + 
A)  MSB = MB + Marginal external benefit. 
B)  MB = Marginal external benefit - MSB. 
C)  MB = Marginal external benefit +

Question 20

Why is it not efficient to eliminate all pollution?

Accepted Answer

Eliminating pollution is a task that use

When production of a good results in an external cost,the unregulated competitive market equilibrium quantity is

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market? i.Overproduction relative to the efficient level will occur. ii.The market price is less than the marginal social cost at the equilibrium quantity. iii.A deadweight loss occurs.

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-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 deadweight loss equals

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is and the efficient number of immunizations per year is .

An example of someone bearing the burden of a negative consumption externality would be

-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 number of students being privately educated is and the efficient quantity is .

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal external cost when 100 billion kilowatt hours are produced is

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a $10 subsidy to providers of immunizations,the number of people immunized is ________.

-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 number of students being privately educated is

The marginal social cost of producing a good or service is the

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

A noisy party that keeps neighbors awake is an example of a

If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500,then the

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

-The figure above shows the costs and benefits associated with producing paper.What is the efficient level of output?

Which of the following is true?

Why is it not efficient to eliminate all pollution?

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

When production of a good results in an external cost,the unregulated competitive market equilibrium quantity is

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market? i.Overproduction relative to the efficient level will occur. ii.The market price is less than the marginal social cost at the equilibrium quantity. iii.A deadweight loss occurs.

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-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 deadweight loss equals

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,the number of immunizations per year is ________ and the efficient number of immunizations per year is ________.

An example of someone bearing the burden of a negative consumption externality would be

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal external cost when 100 billion kilowatt hours are produced is

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a $10 subsidy to providers of immunizations,the number of people immunized is ________.

-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 number of students being privately educated is

The marginal social cost of producing a good or service is the

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

A noisy party that keeps neighbors awake is an example of a

If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500,then the

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

-The figure above shows the costs and benefits associated with producing paper.What is the efficient level of output?

Which of the following is true?

Why is it not efficient to eliminate all pollution?

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.If the government does not intervene in this market,the number of immunizations per year is and the efficient number of immunizations per year is .