Question 1

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 2

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 3

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).
-Using the figure above, suppose a subsidy of $15,000 per student is provided to private colleges.When the market is in equilibrium, marginal social benefit ________ marginal cost, and the number of students enrolled is ________.

Accepted Answer

A) exceeds; above the efficient quantity 
B) exceeds; below the efficient quantity 
C) is below; above the efficient quantity 
D) is below; below the efficient quantity 
E) equals; efficient 
A) exceeds; above the efficient quantity 
B) exceeds; below the efficient quantity 
C) is below; above the efficient quantity 
D) is below; below the efficient quantity 
E) equals; efficient

Question 4

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

Accepted Answer

A) pollution charge; marginal social cost 
B) pollution charge; marginal external cost 
C) pollution tax; marginal social cost 
D) pollution tax; marginal external cost 
E) pollution subsidy; marginal social cost 
A) pollution charge; marginal social cost 
B) pollution charge; marginal external cost 
C) pollution tax; marginal social cost 
D) pollution tax; marginal external cost 
E) pollution subsidy; marginal social cost

Question 5

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 6

Vouchers given to consumers

Accepted Answer

A) increase the demand for a good. 
B) decrease the demand for a good. 
C) increase the supply of a good. 
D) decrease the supply of a good. 
E) increase both the demand for the good and the supply of the good. 
A) increase the demand for a good. 
B) decrease the demand for a good. 
C) increase the supply of a good. 
D) decrease the supply of a good. 
E) increase both the demand for the good and the supply of the good.

Question 7

The Coase theorem is the proposition that if property rights exist and are enforced, private transactions are

Accepted Answer

A) inefficient. 
B) efficient. 
C) inequitable. 
D) illegal. 
E) unnecessary. 
A) inefficient. 
B) efficient. 
C) inequitable. 
D) illegal. 
E) unnecessary.

Question 8

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the deadweight loss equals ________ per year.

Accepted Answer

A) $28 billion 
B) $14 billion 
C) $280 billion 
D) $224 billion 
E) $7 billion 
A) $28 billion 
B) $14 billion 
C) $280 billion 
D) $224 billion 
E) $7 billion

Question 9

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 10

A example of a good with external benefits is

Accepted Answer

A) a pizza. 
B) a dose of flu vaccine. 
C) a sewing machine. 
D) an imported good. 
E) a pair of running shoes. 
A) a pizza. 
B) a dose of flu vaccine. 
C) a sewing machine. 
D) an imported good. 
E) a pair of running shoes.

Question 11

Why does government provide educational opportunities in the form of vouchers, private subsidies, and public provision?

Accepted Answer

Education generates external benefits.Wi

Question 12

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Accepted Answer

A) the marginal cost. 
B) represented by the demand curve. 
C) represented by the supply curve. 
D) the marginal external cost. 
E) the marginal social cost. 
A) the marginal cost. 
B) represented by the demand curve. 
C) represented by the supply curve. 
D) the marginal external cost. 
E) the marginal social cost.

Question 13

-The figure shows the market for college education.If the market for education is competitive and with no government intervention, the equilibrium quantity of college students is ________ million and the efficient quantity of college students is ________ million.

Accepted Answer

A) 2; 4 
B) 8; 2 
C) 8; 4 
D) 4; 8 
E) 0; 10 
A) 2; 4 
B) 8; 2 
C) 8; 4 
D) 4; 8 
E) 0; 10

Question 14

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation, how many tons of leather will be produced?

Accepted Answer

A) 0 tons 
B) 200 tons 
C) 300 tons 
D) more than 300 tons 
E) None of the above answers is correct. 
A) 0 tons 
B) 200 tons 
C) 300 tons 
D) more than 300 tons 
E) None of the above answers is correct.

Question 15

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost.The government imposes the pollution tax shown in the above figure.What quantity is produced after the pollution tax is imposed?

Accepted Answer

A) zero pounds 
B) 80 million pounds 
C) 160 million pounds 
D) more than 160 million pounds 
E) more than 80 million pounds and less than 160 million pounds. 
A) zero pounds 
B) 80 million pounds 
C) 160 million pounds 
D) more than 160 million pounds 
E) more than 80 million pounds and less than 160 million pounds.

Question 16

In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

Accepted Answer

A) marginal private cost. 
B) marginal external cost. 
C) marginal social cost. 
D) marginal benefit of polluting. 
E) price of the good. 
A) marginal private cost. 
B) marginal external cost. 
C) marginal social cost. 
D) marginal benefit of polluting. 
E) price of the good.

Question 17

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action, the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

Accepted Answer

A) 8; $150 
B) 8; $300 
C) 10; $250 
D) 10; $100 
E) 10; $150 
A) 8; $150 
B) 8; $300 
C) 10; $250 
D) 10; $100 
E) 10; $150

Question 18

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve.If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.

Accepted Answer

A) 0¢ 
B) 7.5¢ 
C) 10¢ 
D) 15¢ 
E) 2.5¢ 
A) 0¢ 
B) 7.5¢ 
C) 10¢ 
D) 15¢ 
E) 2.5¢

Question 19

To ensure all students are protected from getting the flu this year, your school offers free flu shots.What type of externality exists in this example?

Accepted Answer

A) Negative consumption externality. 
B) Positive consumption externality. 
C) Positive production externality. 
D) Negative production externality. 
E) Neutral externality. 
A) Negative consumption externality. 
B) Positive consumption externality. 
C) Positive production externality. 
D) Negative production externality. 
E) Neutral externality.

Question 20

Which of the following is an example of an external cost?

Accepted Answer

A) taxes 
B) the price of a car wash 
C) pollution 
D) an electricity bill 
E) paying a wage that exceeds the minimum wage 
A) taxes 
B) the price of a car wash 
C) pollution 
D) an electricity bill 
E) paying a wage that exceeds the minimum wage

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

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

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output, a government could impose a that equals the of the pollution.

When studying pollution and the environment, economists

Vouchers given to consumers

The Coase theorem is the proposition that if property rights exist and are enforced, private transactions are

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the deadweight loss equals ________ per year.

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

A example of a good with external benefits is

Why does government provide educational opportunities in the form of vouchers, private subsidies, and public provision?

The cost of producing an additional unit of a good or service that falls on people other than the producer is

-The figure shows the market for college education.If the market for education is competitive and with no government intervention, the equilibrium quantity of college students is million and the efficient quantity of college students is million.

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation, how many tons of leather will be produced?

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost.The government imposes the pollution tax shown in the above figure.What quantity is produced after the pollution tax is imposed?

In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action, the equilibrium quantity is units and the equilibrium price is per unit.

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve.If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.

To ensure all students are protected from getting the flu this year, your school offers free flu shots.What type of externality exists in this example?

Which of the following is an example of an external cost?

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

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

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

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

When studying pollution and the environment, economists

Vouchers given to consumers

The Coase theorem is the proposition that if property rights exist and are enforced, private transactions are

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the deadweight loss equals ________ per year.

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

A example of a good with external benefits is

Why does government provide educational opportunities in the form of vouchers, private subsidies, and public provision?

The cost of producing an additional unit of a good or service that falls on people other than the producer is

-The figure shows the market for college education.If the market for education is competitive and with no government intervention, the equilibrium quantity of college students is ________ million and the efficient quantity of college students is ________ million.

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation, how many tons of leather will be produced?

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost.The government imposes the pollution tax shown in the above figure.What quantity is produced after the pollution tax is imposed?

In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action, the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve.If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.

To ensure all students are protected from getting the flu this year, your school offers free flu shots.What type of externality exists in this example?

Which of the following is an example of an external cost?

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

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

Suppose a firm pollutes a river when it produces a product.To achieve the efficient amount of output, a government could impose a that equals the of the pollution.

-The figure shows the market for college education.If the market for education is competitive and with no government intervention, the equilibrium quantity of college students is million and the efficient quantity of college students is million.

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action, the equilibrium quantity is units and the equilibrium price is per unit.