Question 1

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

Accepted Answer

A) property rights. 
B) Coase rights. 
C) pollution rights. 
D) emission rights. 
E) price-setting rights. 
A) property rights. 
B) Coase rights. 
C) pollution rights. 
D) emission rights. 
E) price-setting rights.

Question 2

Which of the following actions would most likely have an external benefit?

Accepted Answer

A) eating a peanut butter sandwich 
B) throwing trash out your car window as you drive to class 
C) sleeping 
D) attending college 
E) developing a better marketing strategy for Honda 
A) eating a peanut butter sandwich 
B) throwing trash out your car window as you drive to class 
C) sleeping 
D) attending college 
E) developing a better marketing strategy for Honda

Question 3

The deadweight loss associated with producing a product that has an external cost occurs because

Accepted Answer

A) too much output is produced. 
B) too little output is produced. 
C) the price firms charge for the good is too high. 
D) not enough resources are allocated to producing the good. 
E) the marginal social cost does not equal zero. 
A) too much output is produced. 
B) too little output is produced. 
C) the price firms charge for the good is too high. 
D) not enough resources are allocated to producing the good. 
E) the marginal social cost does not equal zero.

Question 4

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

Accepted Answer

While many people might like to see a mi

Question 5

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because, without government intervention, ________ would be consumed and ________ would be produced.

Accepted Answer

A) more than the efficient amount; more than the efficient amount 
B) more than the efficient amount; less than the efficient amount 
C) less than the efficient amount; more than the efficient amount 
D) less than the efficient amount; less than the efficient amount 
E) the efficient amount; the efficient amount 
A) more than the efficient amount; more than the efficient amount 
B) more than the efficient amount; less than the efficient amount 
C) less than the efficient amount; more than the efficient amount 
D) less than the efficient amount; less than the efficient amount 
E) the efficient amount; the efficient amount

Question 6

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

Accepted Answer

A) 5 
B) 10 
C) 15 
D) 20 
E) 25 
A) 5 
B) 10 
C) 15 
D) 20 
E) 25

Question 7

In the figure above, if a pollution tax is imposed that is equal to the marginal external cost of pollution, then when the market is in equilibrium, the deadweight loss is ________ thousand per month.

Accepted Answer

A) $250 
B) $125 
C) $150 
D) $50 
E) zero 
A) $250 
B) $125 
C) $150 
D) $50 
E) zero

Question 8

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

Accepted Answer

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

Question 9

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 education is provided by public colleges, where tuition is set at $10,000 a year.Then, ________ million students are enrolled, and the taxpayers cover ________ of marginal cost per student.

Accepted Answer

A) 15; $15,000 
B) 7.5; $5,000 
C) 3.5; none 
D) 15; $25,000 
E) 7.5; $15,000 
A) 15; $15,000 
B) 7.5; $5,000 
C) 3.5; none 
D) 15; $25,000 
E) 7.5; $15,000

Question 10

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

Accepted Answer

A) The quantity supplied along the firm's supply curve increases. 
B) The firm's demand curve shifts leftward. 
C) The firm's supply curve shifts rightward. 
D) The firm's supply curve shifts leftward. 
E) Both the supply curve and the demand curve shift leftward. 
A) The quantity supplied along the firm's supply curve increases. 
B) The firm's demand curve shifts leftward. 
C) The firm's supply curve shifts rightward. 
D) The firm's supply curve shifts leftward. 
E) Both the supply curve and the demand curve shift leftward.

Question 11

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Accepted Answer

A) Curve 1 
B) Curve 2 
C) the dotted line BC 
D) the y-axis 
E) the dotted line AB 
A) Curve 1 
B) Curve 2 
C) the dotted line BC 
D) the y-axis 
E) the dotted line AB

Question 12

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

Accepted Answer

Education creates an external benefit.He

Question 13

-The figure above shows the market for college education.The efficient quantity of education is

Accepted Answer

A) 0 students. 
B) 4 million students. 
C) 6 million students. 
D) more than 6 million students. 
E) more than 4 million students and less than 6 million students. 
A) 0 students. 
B) 4 million students. 
C) 6 million students. 
D) more than 6 million students. 
E) more than 4 million students and less than 6 million students.

Question 14

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

Accepted Answer

A) always equals the benefit the consumer derives from that good or service. 
B) equals the cost borne by people other than the producer. 
C) is the marginal private cost. 
D) is the external cost. 
E) is the marginal social cost. 
A) always equals the benefit the consumer derives from that good or service. 
B) equals the cost borne by people other than the producer. 
C) is the marginal private cost. 
D) is the external cost. 
E) is the marginal social cost.

Question 15

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed, the equilibrium quantity of gasoline is

Accepted Answer

A) 0 gallons. 
B) 5 million gallons. 
C) 10 million gallons. 
D) 20 million gallons. 
E) 15 million gallons. 
A) 0 gallons. 
B) 5 million gallons. 
C) 10 million gallons. 
D) 20 million gallons. 
E) 15 million gallons.

Question 16

Harry, the owner of a beauty salon, hires a new hair stylist.The wages paid to the new stylist are

Accepted Answer

A) a private cost and not an external cost . 
B) an external cost and not a private cost. 
C) both a private cost and an external cost. 
D) neither a private cost nor an external cost. 
E) only a private benefit because people want their hair styled. 
A) a private cost and not an external cost . 
B) an external cost and not a private cost. 
C) both a private cost and an external cost. 
D) neither a private cost nor an external cost. 
E) only a private benefit because people want their hair styled.

Question 17

A voucher is

Accepted Answer

A) the production of a good by some public institution. 
B) a payment that government makes to private producers. 
C) a token that government provides to households to use in purchasing a specific good. 
D) a permit to pollute. 
E) a tax that is imposed on consumers rather than producers. 
A) the production of a good by some public institution. 
B) a payment that government makes to private producers. 
C) a token that government provides to households to use in purchasing a specific good. 
D) a permit to pollute. 
E) a tax that is imposed on consumers rather than producers.

Question 18

Which of the following is true regarding pollution charges?
I∙They force a polluter to pay a price for its pollution.
Ii∙They are based on the marginal external cost of pollution.
Iii∙The fee that produces the efficient amount of pollution is easily determined.

Accepted Answer

A) i only 
B) i and ii 
C) ii and iii 
D) i, ii, and iii 
E) i and iii 
A) i only 
B) i and ii 
C) ii and iii 
D) i, ii, and iii 
E) i and iii

Question 19

-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 figure.How much tax revenue does the government collect?

Accepted Answer

A) $640 million 
B) $320 million 
C) $240 million 
D) More than $640 million 
E) Zero because the government has taxed the firms out of business. 
A) $640 million 
B) $320 million 
C) $240 million 
D) More than $640 million 
E) Zero because the government has taxed the firms out of business.

Question 20

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced, the subsidy must equal ________ per unit.

Accepted Answer

A) $100 
B) $150 
C) $250 
D) $300 
E) $50 
A) $100 
B) $150 
C) $250 
D) $300 
E) $50

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

Which of the following actions would most likely have an external benefit?

The deadweight loss associated with producing a product that has an external cost occurs because

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because, without government intervention, would be consumed and would be produced.

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

In the figure above, if a pollution tax is imposed that is equal to the marginal external cost of pollution, then when the market is in equilibrium, the deadweight loss is ________ thousand per month.

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

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

-The figure above shows the market for college education.The efficient quantity of education is

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed, the equilibrium quantity of gasoline is

Harry, the owner of a beauty salon, hires a new hair stylist.The wages paid to the new stylist are

A voucher is

Which of the following is true regarding pollution charges? I∙They force a polluter to pay a price for its pollution. Ii∙They are based on the marginal external cost of pollution. Iii∙The fee that produces the efficient amount of pollution is easily determined.

-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 figure.How much tax revenue does the government collect?

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced, the subsidy must equal ________ per unit.

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

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

Which of the following actions would most likely have an external benefit?

The deadweight loss associated with producing a product that has an external cost occurs because

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because, without government intervention, ________ would be consumed and ________ would be produced.

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

In the figure above, if a pollution tax is imposed that is equal to the marginal external cost of pollution, then when the market is in equilibrium, the deadweight loss is ________ thousand per month.

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

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

-The figure above represents the relationship between output and cost in an industry with an external cost.Which line represents the marginal private cost (MC)curve?

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

-The figure above shows the market for college education.The efficient quantity of education is

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed, the equilibrium quantity of gasoline is

Harry, the owner of a beauty salon, hires a new hair stylist.The wages paid to the new stylist are

A voucher is

Which of the following is true regarding pollution charges? I∙They force a polluter to pay a price for its pollution. Ii∙They are based on the marginal external cost of pollution. Iii∙The fee that produces the efficient amount of pollution is easily determined.

-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 figure.How much tax revenue does the government collect?

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced, the subsidy must equal ________ per unit.

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 existence of marginal external benefits for a product like higher education creates a deadweight loss for society because, without government intervention, would be consumed and would be produced.