Question 1

Education leads to external benefits because

Accepted Answer

A) the people who become better educated get better jobs. 
B) better educated people commit fewer crimes. 
C) better educated people are less lazy. 
D) little pollution is created when educating people. 
E) better educated people are more productive. 
A) the people who become better educated get better jobs. 
B) better educated people commit fewer crimes. 
C) better educated people are less lazy. 
D) little pollution is created when educating people. 
E) better educated people are more productive.

Question 2

An external benefit is a benefit from a good or service that someone other than the ________ receives.

Accepted Answer

A) seller of the good or service 
B) government 
C) foreign sector 
D) consumer 
E) market maker 
A) seller of the good or service 
B) government 
C) foreign sector 
D) consumer 
E) market maker

Question 3

In an unregulated market with an external benefit, the

Accepted Answer

A) quantity produced is greater than the efficient quantity. 
B) price charged is too high for efficiency. 
C) quantity produced is less than the efficient quantity. 
D) producer is causing pollution but not paying for it. 
E) government might impose a tax to help move the market toward the efficient amount of production. 
A) quantity produced is greater than the efficient quantity. 
B) price charged is too high for efficiency. 
C) quantity produced is less than the efficient quantity. 
D) producer is causing pollution but not paying for it. 
E) government might impose a tax to help move the market toward the efficient amount of production.

Question 4

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market, the equilibrium number of students being privately educated is

Accepted Answer

A) 0 students. 
B) 200 students. 
C) 400 students. 
D) 600 students. 
E) None of the above answers is correct. 
A) 0 students. 
B) 200 students. 
C) 400 students. 
D) 600 students. 
E) None of the above answers is correct.

Question 5

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

Accepted Answer

Buyers ignore the presence of an externa

Question 6

When government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the

Accepted Answer

A) marginal private benefit at the efficient level of output. 
B) marginal private cost at the efficient level of output. 
C) amount paid by taxpayers. 
D) market-determined price. 
E) marginal external benefit at the efficient level of output. 
A) marginal private benefit at the efficient level of output. 
B) marginal private cost at the efficient level of output. 
C) amount paid by taxpayers. 
D) market-determined price. 
E) marginal external benefit at the efficient level of output.

Question 7

If a producer must pay the cost of his or her pollution because property rights have been assigned, then

Accepted Answer

A) pollution will be completely eliminated. 
B) the supply curve will shift rightward as the new costs are added. 
C) the supply curve will shift leftward as the new costs are added. 
D) consumers will now consume more of the good because the external costs are reduced. 
E) there is no longer any marginal benefit from the good or service being produced. 
A) pollution will be completely eliminated. 
B) the supply curve will shift rightward as the new costs are added. 
C) the supply curve will shift leftward as the new costs are added. 
D) consumers will now consume more of the good because the external costs are reduced. 
E) there is no longer any marginal benefit from the good or service being produced.

Question 8

-The figure above shows a tax imposed on a good with an external cost.The area of the rectangle abcd equals

Accepted Answer

A) the MSB. 
B) the total tax revenue collected by the government. 
C) the amount of pollution tax per ton. 
D) the MC. 
E) the deadweight loss. 
A) the MSB. 
B) the total tax revenue collected by the government. 
C) the amount of pollution tax per ton. 
D) the MC. 
E) the deadweight loss.

Question 9

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of

Accepted Answer

A) an external cost. 
B) a private cost. 
C) a government cost. 
D) an external benefit. 
E) None of the above answers is correct. 
A) an external cost. 
B) a private cost. 
C) a government cost. 
D) an external benefit. 
E) None of the above answers is correct.

Question 10

What is marginal external cost? Give an example.

Accepted Answer

Marginal external cost is the additional

Question 11

-The table above gives the marginal social cost (which equals the price), marginal private benefit, and marginal social benefit of students attending Diablo Valley College (DVC)in Concord, California.
a∙When 4,500 students attend DVC, what does the marginal external benefit equal?
b∙If the market is competitive and left without government intervention, what is the quantity of students that will attend DVC and what will be the price of a course?
c∙What is the efficient quantity of students attending DVC?
d∙If the government can set the price per course, in order to have the efficient quantity of students attending DVC, what should the government set as the price?

Accepted Answer

a∙The marginal external benefit equals $

Question 12

MSB equals

Accepted Answer

A) MC + the marginal external cost. 
B) MC + the marginal external benefit. 
C) MB + the marginal external cost. 
D) MB + the marginal external benefit. 
E) MB + MC. 
A) MC + the marginal external cost. 
B) MC + the marginal external benefit. 
C) MB + the marginal external cost. 
D) MB + the marginal external benefit. 
E) MB + MC.

Question 13

When young students are hungry, they can be disruptive and inattentive in class.Thus, providing lunch to students has external benefits.The figure above represents the market for school lunches before and after government vouchers are issued.
a∙What is the unregulated private market equilibrium?
b∙What is the efficient quantity of lunches?
c∙What is the amount of the voucher necessary to move the economy to the efficient number of lunches?
d∙When vouchers are used, what is the dollar price of the lunch that suppliers receive and what is the dollar price that consumers pay when the voucher is used?

Accepted Answer

a∙If the market is left unregulated, 4 m

Question 14

If producing a good or a service creates pollution, then

Accepted Answer

A) an unregulated competitive market produces an efficient output. 
B) the industry's supply curve includes the extra cost of pollution. 
C) at the unregulated, competitive market equilibrium quantity, marginal social cost is greater than the equilibrium price. 
D) at the unregulated, competitive market equilibrium quantity, marginal social benefit and marginal social cost are equal. 
E) at the unregulated, competitive market equilibrium quantity, marginal social benefit is less than the equilibrium price. 
A) an unregulated competitive market produces an efficient output. 
B) the industry's supply curve includes the extra cost of pollution. 
C) at the unregulated, competitive market equilibrium quantity, marginal social cost is greater than the equilibrium price. 
D) at the unregulated, competitive market equilibrium quantity, marginal social benefit and marginal social cost are equal. 
E) at the unregulated, competitive market equilibrium quantity, marginal social benefit is less than the equilibrium price.

Question 15

If vouchers for a good or service given to consumers, then the supply curve ________ and the demand curve ________.

Accepted Answer

A) shifts leftward; shifts leftward 
B) shifts leftward; shifts rightward 
C) shifts rightward; shifts rightward 
D) does not shift; shifts rightward 
E) shifts rightward; does not shift 
A) shifts leftward; shifts leftward 
B) shifts leftward; shifts rightward 
C) shifts rightward; shifts rightward 
D) does not shift; shifts rightward 
E) shifts rightward; does not shift

Question 16

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

Accepted Answer

A) external cost. 
B) private cost. 
C) social cost. 
D) public cost. 
E) None of the above answers is correct. 
A) external cost. 
B) private cost. 
C) social cost. 
D) public cost. 
E) None of the above answers is correct.

Question 17

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

Accepted Answer

A) a grove of trees planted in a park in Seattle 
B) a library built in Philadelphia 
C) a new, faster computer chip 
D) an oil spill off the coast of South America 
E) a student graduating from college 
A) a grove of trees planted in a park in Seattle 
B) a library built in Philadelphia 
C) a new, faster computer chip 
D) an oil spill off the coast of South America 
E) a student graduating from college

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 Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

Accepted Answer

A) 0 
B) 150 billion 
C) 200 billion 
D) 100 billion 
E) more than 200 billion 
A) 0 
B) 150 billion 
C) 200 billion 
D) 100 billion 
E) more than 200 billion

Question 19

When people decide whether or not to get a flu vaccination, they ignore the ________ and as a result ________.

Accepted Answer

A) marginal private benefit; too few vaccinations are given 
B) external benefit; too few vaccinations are given 
C) private cost; too many vaccinations are given 
D) marginal external cost; vouchers must be provided 
E) social cost; too many vaccinations are given 
A) marginal private benefit; too few vaccinations are given 
B) external benefit; too few vaccinations are given 
C) private cost; too many vaccinations are given 
D) marginal external cost; vouchers must be provided 
E) social cost; too many vaccinations are given

Question 20

The marginal cost of production that is borne by the entire society is called the marginal

Accepted Answer

A) private cost. 
B) social cost. 
C) external cost. 
D) public cost. 
E) user cost. 
A) private cost. 
B) social cost. 
C) external cost. 
D) public cost. 
E) user cost.

Education leads to external benefits because

An external benefit is a benefit from a good or service that someone other than the ________ receives.

In an unregulated market with an external benefit, the

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market, the equilibrium number of students being privately educated is

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

When government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the

If a producer must pay the cost of his or her pollution because property rights have been assigned, then

-The figure above shows a tax imposed on a good with an external cost.The area of the rectangle abcd equals

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of

What is marginal external cost? Give an example.

MSB equals

If producing a good or a service creates pollution, then

If vouchers for a good or service given to consumers, then the supply curve and the demand curve .

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

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

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve.If the Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

When people decide whether or not to get a flu vaccination, they ignore the and as a result .

The marginal cost of production that is borne by the entire society is called the marginal

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

Education leads to external benefits because

An external benefit is a benefit from a good or service that someone other than the ________ receives.

In an unregulated market with an external benefit, the

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market, the equilibrium number of students being privately educated is

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

When government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the

If a producer must pay the cost of his or her pollution because property rights have been assigned, then

-The figure above shows a tax imposed on a good with an external cost.The area of the rectangle abcd equals

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of

What is marginal external cost? Give an example.

MSB equals

If producing a good or a service creates pollution, then

If vouchers for a good or service given to consumers, then the supply curve ________ and the demand curve ________.

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

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

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve.If the Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

When people decide whether or not to get a flu vaccination, they ignore the ________ and as a result ________.

The marginal cost of production that is borne by the entire society is called the marginal

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

If vouchers for a good or service given to consumers, then the supply curve and the demand curve .

When people decide whether or not to get a flu vaccination, they ignore the and as a result .