Question 1

Which of the following describes how a negative externality affects a competitive market?

Accepted Answer

A) The externality causes a difference between the private cost of production and the social cost. 
B) The externality causes a difference between the private cost of production and the private benefit from consumption. 
C) The externality causes consumer surplus to exceed producer surplus. 
D) The externality causes a difference between the private cost of production and the equilibrium price. 
A) The externality causes a difference between the private cost of production and the social cost. 
B) The externality causes a difference between the private cost of production and the private benefit from consumption. 
C) The externality causes consumer surplus to exceed producer surplus. 
D) The externality causes a difference between the private cost of production and the equilibrium price.

Question 2

Which of the following statements best describes the concept of consumer surplus?

Accepted Answer

A) "Safeway was having a sale on Dreyer's ice cream so I bought 3 quarts." 
B) "I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket." 
C) "I paid $130 for a printer last week.This week the same store is selling the same printer for $110." 
D) "I sold my Blu-ray copy of Ben-Hur for $18 at a garage sale even though I was willing to sell it for $10." 
A) "Safeway was having a sale on Dreyer's ice cream so I bought 3 quarts." 
B) "I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket." 
C) "I paid $130 for a printer last week.This week the same store is selling the same printer for $110." 
D) "I sold my Blu-ray copy of Ben-Hur for $18 at a garage sale even though I was willing to sell it for $10."

Question 3

Economist A.C.Pigou argued that to deal with a negative externality in production,the government should impose a tax equal to the cost of the externality.What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?

Accepted Answer

Pigou believed that,in the case of a pos

Question 4

Governments can increase the consumption of a product that creates positive externalities by

Accepted Answer

A) subsidizing the production of the product so that the supply is increased and market price is reduced. 
B) taxing the production and consumption of the product. 
C) convincing everyone to consume the good. 
D) assigning property rights to the producers of the product. 
A) subsidizing the production of the product so that the supply is increased and market price is reduced. 
B) taxing the production and consumption of the product. 
C) convincing everyone to consume the good. 
D) assigning property rights to the producers of the product.

Question 5

Which of the following is a source of market failure?

Accepted Answer

A) unforeseen circumstances which leads to the bankruptcy of many firms 
B) a lack of government intervention in a market 
C) incomplete property rights or inability to enforce property rights 
D) an inequitable income distribution 
A) unforeseen circumstances which leads to the bankruptcy of many firms 
B) a lack of government intervention in a market 
C) incomplete property rights or inability to enforce property rights 
D) an inequitable income distribution

Which of the following describes how a negative externality affects a competitive market?

Which of the following statements best describes the concept of consumer surplus?

Governments can increase the consumption of a product that creates positive externalities by

Which of the following is a source of market failure?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 4: Market Efficiency and Market Failure

Which of the following describes how a negative externality affects a competitive market?

Which of the following statements best describes the concept of consumer surplus?

Governments can increase the consumption of a product that creates positive externalities by

Which of the following is a source of market failure?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters