Question 1

Which of the following is a pure public good?

Accepted Answer

A) cable TV service 
B) fire protection 
C) a fireworks display 
D) corn flakes 
E) higher education 
A) cable TV service 
B) fire protection 
C) a fireworks display 
D) corn flakes 
E) higher education

Question 2

Pollution is a form of market failure called a public externality.

Accepted Answer

A) True 
 B)False

Question 3

One problem with average cost pricing for a natural monopoly is that

Accepted Answer

A) it requires a side payment 
B) maximizes the firm's revenue 
C) makes the firm's total cost equal to zero 
D) maximizes the firm's profit 
E) it provides no incentive for the firm to economize on capital 
A) it requires a side payment 
B) maximizes the firm's revenue 
C) makes the firm's total cost equal to zero 
D) maximizes the firm's profit 
E) it provides no incentive for the firm to economize on capital

Question 4

Which of the following is an example of a regulatory action?

Accepted Answer

A) Drivers who exceed the speed limit will pay a fine if caught. 
B) Automobile manufacturers are required to include built-in infant seats. 
C) Two firms receive $100,000 fines for engaging in a price-fixing agreement. 
D) A junk mail solicitor is taken to jail for mail fraud. 
E) The tobacco industry is required to pay for the hospital bills of a lifelong smoker who develops cancer. 
A) Drivers who exceed the speed limit will pay a fine if caught. 
B) Automobile manufacturers are required to include built-in infant seats. 
C) Two firms receive $100,000 fines for engaging in a price-fixing agreement. 
D) A junk mail solicitor is taken to jail for mail fraud. 
E) The tobacco industry is required to pay for the hospital bills of a lifelong smoker who develops cancer.

Question 5

A candy bar is an example of a good that is

Accepted Answer

A) both rival and excludable 
B) non-rival but excludable 
C) both non-rival and non-excludable 
D) rival but non-excludable 
E) rival but usually produced inefficiently 
A) both rival and excludable 
B) non-rival but excludable 
C) both non-rival and non-excludable 
D) rival but non-excludable 
E) rival but usually produced inefficiently

Question 6

Suppose that Pat has the legal right to fly an extremely noisy airplane over Chris's apartment and that he values that right at $1,000 per year.Chris would be willing to pay $800 per year to avoid the noise.In this case,

Accepted Answer

A) Pat will be required to eliminate the overflight 
B) Chris will move to a new apartment 
C) Pat and Chris have a powerful incentive to eliminate the overflight because both would benefit from it 
D) some governmental agency will step in to require Pat to choose a different flight pattern 
E) there is no basis for an agreement to eliminate the overflight 
A) Pat will be required to eliminate the overflight 
B) Chris will move to a new apartment 
C) Pat and Chris have a powerful incentive to eliminate the overflight because both would benefit from it 
D) some governmental agency will step in to require Pat to choose a different flight pattern 
E) there is no basis for an agreement to eliminate the overflight

Question 7

Highway traffic is a mixed good because

Accepted Answer

A) some people like it and others do not 
B) drivers creates costs that are borne by other drivers 
C) it is not free of charge 
D) because highways are rivalrous,but not easily excludable 
E) because highways are excludable,but not easily rival 
A) some people like it and others do not 
B) drivers creates costs that are borne by other drivers 
C) it is not free of charge 
D) because highways are rivalrous,but not easily excludable 
E) because highways are excludable,but not easily rival

Question 8

An economic benefit of contracts is that they

Accepted Answer

A) protect property rights 
B) encourage involuntary exchanges 
C) reduce the number of possible Pareto improvements 
D) encourage market concentration 
E) encourage specialization 
A) protect property rights 
B) encourage involuntary exchanges 
C) reduce the number of possible Pareto improvements 
D) encourage market concentration 
E) encourage specialization

Question 9

Which of the following is an example of a nonrival good?

Accepted Answer

A) food 
B) an automobile 
C) a view of the sun rising 
D) public housing 
E) a private apartment 
A) food 
B) an automobile 
C) a view of the sun rising 
D) public housing 
E) a private apartment

Question 10

If a firm is not forced to take account of a negative externality it creates,it will produce the quantity at which

Accepted Answer

A) the marginal cost of production equals the marginal private benefit 
B) the marginal cost of production equals the marginal social benefit 
C) the marginal social cost of production the equals marginal private benefit 
D) the marginal social cost of production equals the marginal social benefit 
E) price equals marginal social benefit 
A) the marginal cost of production equals the marginal private benefit 
B) the marginal cost of production equals the marginal social benefit 
C) the marginal social cost of production the equals marginal private benefit 
D) the marginal social cost of production equals the marginal social benefit 
E) price equals marginal social benefit

Question 11

If one person's consumption of a good means that no one else can consume it,

Accepted Answer

A) that good is called a pure public good 
B) production of that good creates a negative externality 
C) consumption of that good creates a positive externality 
D) the good is said to be excludable 
E) the good is said to be rival 
A) that good is called a pure public good 
B) production of that good creates a negative externality 
C) consumption of that good creates a positive externality 
D) the good is said to be excludable 
E) the good is said to be rival

Question 12

Which of the following is an example of a negative externality?

Accepted Answer

A) Picking up your trash 
B) Going to class sick 
C) Planting pretty flowers in your yard 
D) Getting vaccinated 
E) Going to class 
A) Picking up your trash 
B) Going to class sick 
C) Planting pretty flowers in your yard 
D) Getting vaccinated 
E) Going to class

Question 13

Market failure occurs when

Accepted Answer

A) all Pareto improvements are undertaken 
B) refusal to make a side payment reduces Pareto efficiency 
C) the economy operates above the production possibilities frontier 
D) markets are perfectly competitive 
E) some Pareto improvements are not made 
A) all Pareto improvements are undertaken 
B) refusal to make a side payment reduces Pareto efficiency 
C) the economy operates above the production possibilities frontier 
D) markets are perfectly competitive 
E) some Pareto improvements are not made

Question 14

Government can play a crucial role in promoting economic efficiency by

Accepted Answer

A) taxing income 
B) providing physical and institutional infrastructures 
C) establishing price ceilings to help certain buyers 
D) establishing price floors to help certain sellers 
E) creating barriers to market entry whenever there is a threat of excessive competition 
A) taxing income 
B) providing physical and institutional infrastructures 
C) establishing price ceilings to help certain buyers 
D) establishing price floors to help certain sellers 
E) creating barriers to market entry whenever there is a threat of excessive competition

Question 15

A pure private good has two characteristics: rivalry and excludability.Rivalry suggests that a private market,rather than the public sector,should produce the good,and excludability suggests a private market will provide it.

Accepted Answer

A) True 
 B)False

Which of the following is a pure public good?

Pollution is a form of market failure called a public externality.

One problem with average cost pricing for a natural monopoly is that

Which of the following is an example of a regulatory action?

A candy bar is an example of a good that is

Suppose that Pat has the legal right to fly an extremely noisy airplane over Chris's apartment and that he values that right at $1,000 per year.Chris would be willing to pay $800 per year to avoid the noise.In this case,

Highway traffic is a mixed good because

An economic benefit of contracts is that they

Which of the following is an example of a nonrival good?

If a firm is not forced to take account of a negative externality it creates,it will produce the quantity at which

If one person's consumption of a good means that no one else can consume it,

Which of the following is an example of a negative externality?

Market failure occurs when

Government can play a crucial role in promoting economic efficiency by

A pure private good has two characteristics: rivalry and excludability.Rivalry suggests that a private market,rather than the public sector,should produce the good,and excludability suggests a private market will provide it.

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

Which of the following is a pure public good?

Pollution is a form of market failure called a public externality.

One problem with average cost pricing for a natural monopoly is that

Which of the following is an example of a regulatory action?

A candy bar is an example of a good that is

Suppose that Pat has the legal right to fly an extremely noisy airplane over Chris's apartment and that he values that right at $1,000 per year.Chris would be willing to pay $800 per year to avoid the noise.In this case,

Highway traffic is a mixed good because

An economic benefit of contracts is that they

Which of the following is an example of a nonrival good?

If a firm is not forced to take account of a negative externality it creates,it will produce the quantity at which

If one person's consumption of a good means that no one else can consume it,

Which of the following is an example of a negative externality?

Market failure occurs when

Government can play a crucial role in promoting economic efficiency by

A pure private good has two characteristics: rivalry and excludability.Rivalry suggests that a private market,rather than the public sector,should produce the good,and excludability suggests a private market will provide it.

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