Question 1

A good is said to be excludable if

Accepted Answer

A) those who do not pay for it can be prevented from consuming it 
B) those who do not produce the good can be prevented from consuming it 
C) it is not traded in a public market 
D) there is no rivalry in consuming it 
E) its use can be continued indefinitely 
A) those who do not pay for it can be prevented from consuming it 
B) those who do not produce the good can be prevented from consuming it 
C) it is not traded in a public market 
D) there is no rivalry in consuming it 
E) its use can be continued indefinitely A

Question 2

Antitrust law

Accepted Answer

A) protects consumers from fraud or similar harm 
B) helps define resource ownership 
C) is designed to enforce contracts 
D) helps prevent firms from limiting competition 
E) cannot be used to increase economic efficiency 
A) protects consumers from fraud or similar harm 
B) helps define resource ownership 
C) is designed to enforce contracts 
D) helps prevent firms from limiting competition 
E) cannot be used to increase economic efficiency D

Question 3

One way in which antitrust law fosters economic efficiency is by

Accepted Answer

A) defining property rights for firms 
B) encouraging voluntary trade 
C) prohibiting firms from colluding to raise prices 
D) enforcing contracts between firms 
E) encouraging mergers that increase market power 
A) defining property rights for firms 
B) encouraging voluntary trade 
C) prohibiting firms from colluding to raise prices 
D) enforcing contracts between firms 
E) encouraging mergers that increase market power C

Question 4

Negative externalities produce inefficiency but positive externalities do not.

Accepted Answer

A) True 
 B)False

Question 5

If production of a good creates negative externalities,then the market

Accepted Answer

A) will under produce it 
B) will over produce it 
C) must be perfectly competitive 
D) must be constrained by barriers to entry 
E) will produce the most efficient quantity 
A) will under produce it 
B) will over produce it 
C) must be perfectly competitive 
D) must be constrained by barriers to entry 
E) will produce the most efficient quantity

Question 6

Existing computer software

Accepted Answer

A) is a public good 
B) is excludable but nonrivalrous 
C) is rivalrous by not excludable 
D) should be provided free of charge 
E) has been produced efficiently 
A) is a public good 
B) is excludable but nonrivalrous 
C) is rivalrous by not excludable 
D) should be provided free of charge 
E) has been produced efficiently

Question 7

In the presence of a negative externality

Accepted Answer

A) the market solution is efficient,but the market price is too high 
B) the market price is efficient,but the corresponding quantity is inefficient 
C) the market solution results in too little output being produced 
D) the efficient outcome is determined where the marginal social cost and market demand curves intersect 
E) the efficient outcome is determined where the marginal cost and market supply curves intersect 
A) the market solution is efficient,but the market price is too high 
B) the market price is efficient,but the corresponding quantity is inefficient 
C) the market solution results in too little output being produced 
D) the efficient outcome is determined where the marginal social cost and market demand curves intersect 
E) the efficient outcome is determined where the marginal cost and market supply curves intersect

Question 8

A natural monopoly,left to itself,

Accepted Answer

A) will take over other industries 
B) will produce the quantity that minimizes long-run average total cost 
C) will produce the quantity that minimizes marginal cost 
D) will produce an inefficient level of output 
E) will charge an inefficiently low price 
A) will take over other industries 
B) will produce the quantity that minimizes long-run average total cost 
C) will produce the quantity that minimizes marginal cost 
D) will produce an inefficient level of output 
E) will charge an inefficiently low price

Question 9

If all unwelcome or harmful activities were eliminated,

Accepted Answer

A) the benefits from eliminating these activities would exceed the cost of eliminating them 
B) there would be no remaining potential Pareto improvements 
C) society would be more efficient 
D) society would be less efficient 
E) the result would be Pareto efficient 
A) the benefits from eliminating these activities would exceed the cost of eliminating them 
B) there would be no remaining potential Pareto improvements 
C) society would be more efficient 
D) society would be less efficient 
E) the result would be Pareto efficient

Question 10

Price-fixing agreements among competing firms are a violation of the Clayton Antitrust Act.

Accepted Answer

A) True 
 B)False

Question 11

Each of the following,except one,is a condition necessary for a private market solution to an externality problem.Which is the exception?

Accepted Answer

A) Legal rights must be clearly established. 
B) Legal rights must be easily transferred. 
C) The number of people involved must be very small. 
D) The amount of money involved must be very small. 
E) Side payments must be arranged without cost. 
A) Legal rights must be clearly established. 
B) Legal rights must be easily transferred. 
C) The number of people involved must be very small. 
D) The amount of money involved must be very small. 
E) Side payments must be arranged without cost.

Question 12

Left to itself,a natural monopoly will produce

Accepted Answer

A) nothing 
B) the efficient level of output 
C) the quantity at which marginal cost equals marginal revenue 
D) the quantity at which the marginal cost and demand curves intersect 
E) the quantity at which the long-run average total cost and demand curves intersect 
A) nothing 
B) the efficient level of output 
C) the quantity at which marginal cost equals marginal revenue 
D) the quantity at which the marginal cost and demand curves intersect 
E) the quantity at which the long-run average total cost and demand curves intersect

Question 13

The marginal social cost (MSC) curve

Accepted Answer

A)  lies above the market demand curve 
B)  lies below the market supply curve 
C)  is perfectly elastic at the market price 
D)  is perfectly inelastic 
E)  indicates the total cost of production, when all costs are considered 
A)  lies above the market demand curve 
B)  lies below the market supply curve 
C)  is perfectly elastic at the market price 
D)  is perfectly inelastic 
E)  indicates the total cost of production, when all costs are considered

Question 14

According to the Coase theorem,

Accepted Answer

A) government intervention is necessary in order to solve an externality problem 
B) an externality is a form of market failure 
C) under certain conditions,the private market will solve externality problems efficiently 
D) the private market will usually solve externality problems,except when side payments are necessary 
E) negative externalities are less efficient that positive externalities 
A) government intervention is necessary in order to solve an externality problem 
B) an externality is a form of market failure 
C) under certain conditions,the private market will solve externality problems efficiently 
D) the private market will usually solve externality problems,except when side payments are necessary 
E) negative externalities are less efficient that positive externalities

Question 15

A typical market supply curve

Accepted Answer

A) is identical to the firm's marginal cost curve 
B) does not reflect any external cost borne by third parties 
C) is identical to the firm's marginal revenue curve 
D) reflects external benefits enjoyed by third parties 
E) is perfectly inelastic 
A) is identical to the firm's marginal cost curve 
B) does not reflect any external cost borne by third parties 
C) is identical to the firm's marginal revenue curve 
D) reflects external benefits enjoyed by third parties 
E) is perfectly inelastic

Question 16

The rights of a co-owner to a share of a firm's profits are

Accepted Answer

A) protected under tort law 
B) protected under contract law 
C) not protected under any form of law 
D) protected under antitrust law 
E) less valuable than the costs of pursuing action against the company 
A) protected under tort law 
B) protected under contract law 
C) not protected under any form of law 
D) protected under antitrust law 
E) less valuable than the costs of pursuing action against the company

Question 17

If a good is nonexcludable,

Accepted Answer

A) the providing it is Pareto optimal 
B) people have an incentive to become free riders on that good 
C) then it is probably also nonrival 
D) then it is a pure public good 
E) then it is a pure private good 
A) the providing it is Pareto optimal 
B) people have an incentive to become free riders on that good 
C) then it is probably also nonrival 
D) then it is a pure public good 
E) then it is a pure private good

Question 18

Because of the free rider problem

Accepted Answer

A) side payments are necessary in order to achieve an efficient outcome 
B) a needed side payment can shrink until it is not large enough to compensate losers and still leave gainers better off 
C) efficient outcomes can never be achieved 
D) the Coase Theory often applies to real-world situations 
E) externalities are less common than they would otherwise be 
A) side payments are necessary in order to achieve an efficient outcome 
B) a needed side payment can shrink until it is not large enough to compensate losers and still leave gainers better off 
C) efficient outcomes can never be achieved 
D) the Coase Theory often applies to real-world situations 
E) externalities are less common than they would otherwise be

Question 19

To make a market efficient in the presence of a negative externality,a tax could be imposed that is equal to the marginal

Accepted Answer

A) social cost 
B) private benefit 
C) social cost minus marginal private cost 
D) social cost minus marginal private benefit 
E) private benefit minus marginal social benefit 
A) social cost 
B) private benefit 
C) social cost minus marginal private cost 
D) social cost minus marginal private benefit 
E) private benefit minus marginal social benefit

Question 20

Pure public goods

Accepted Answer

A) are goods that are provided by the government 
B) are economically efficient 
C) are economically inefficient 
D) are both nonrival and nonexcludable 
E) are Pareto optimal 
A) are goods that are provided by the government 
B) are economically efficient 
C) are economically inefficient 
D) are both nonrival and nonexcludable 
E) are Pareto optimal

A good is said to be excludable if

Antitrust law

One way in which antitrust law fosters economic efficiency is by

Negative externalities produce inefficiency but positive externalities do not.

If production of a good creates negative externalities,then the market

Existing computer software

In the presence of a negative externality

A natural monopoly,left to itself,

If all unwelcome or harmful activities were eliminated,

Price-fixing agreements among competing firms are a violation of the Clayton Antitrust Act.

Each of the following,except one,is a condition necessary for a private market solution to an externality problem.Which is the exception?

Left to itself,a natural monopoly will produce

The marginal social cost (MSC) curve

According to the Coase theorem,

A typical market supply curve

The rights of a co-owner to a share of a firm's profits are

If a good is nonexcludable,

Because of the free rider problem

To make a market efficient in the presence of a negative externality,a tax could be imposed that is equal to the marginal

Pure public goods

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Comparative Advantage and the Gains From International Trade

Filters

Exam 16: Governments Role in Economic Efficiency

A good is said to be excludable if

Antitrust law

One way in which antitrust law fosters economic efficiency is by

Negative externalities produce inefficiency but positive externalities do not.

If production of a good creates negative externalities,then the market

Existing computer software

In the presence of a negative externality

A natural monopoly,left to itself,

If all unwelcome or harmful activities were eliminated,

Price-fixing agreements among competing firms are a violation of the Clayton Antitrust Act.

Each of the following,except one,is a condition necessary for a private market solution to an externality problem.Which is the exception?

Left to itself,a natural monopoly will produce

The marginal social cost (MSC) curve

According to the Coase theorem,

A typical market supply curve

The rights of a co-owner to a share of a firm's profits are

If a good is nonexcludable,

Because of the free rider problem

To make a market efficient in the presence of a negative externality,a tax could be imposed that is equal to the marginal

Pure public goods

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Comparative Advantage and the Gains From International Trade

Filters