Question 1

Cap-and-trade refers to

Accepted Answer

A) capping emissions and issuing tradeable emissions permits. 
B) capping revenue from selling emissions permits. 
C) countries trading fishing rights in international waters. 
D) capping taxes on firms that engage in international trade. 
E) capping the benefits gained from pollution controls. 
A) capping emissions and issuing tradeable emissions permits. 
B) capping revenue from selling emissions permits. 
C) countries trading fishing rights in international waters. 
D) capping taxes on firms that engage in international trade. 
E) capping the benefits gained from pollution controls.

Question 2

Which of the following is the best example of a good or service with an external benefit?

Accepted Answer

A) gasoline 
B) education 
C) garbage disposal 
D) fertilizers 
E) bread 
A) gasoline 
B) education 
C) garbage disposal 
D) fertilizers 
E) bread

Question 3

Marginal social benefit equals

Accepted Answer

A) marginal external benefit. 
B) marginal private benefit. 
C) marginal private benefit minus marginal external benefit. 
D) marginal private benefit plus marginal external benefit. 
E) marginal external benefit minus marginal private benefit. 
A) marginal external benefit. 
B) marginal private benefit. 
C) marginal private benefit minus marginal external benefit. 
D) marginal private benefit plus marginal external benefit. 
E) marginal external benefit minus marginal private benefit.

Question 4

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).
-Based on the figure above, when the market is unregulated and is in equilibrium, the deadweight loss is

Accepted Answer

A) $86.25 million per year. 
B) $56.25 million per year. 
C) $48.75 million per year. 
D) $37.50 million per year. 
E) zero. 
A) $86.25 million per year. 
B) $56.25 million per year. 
C) $48.75 million per year. 
D) $37.50 million per year. 
E) zero.

Question 5

Which of the following is an example of a voucher?

Accepted Answer

A) the postal service 
B) police services 
C) social security 
D) food stamps 
E) a patent on a pharmaceutical drug 
A) the postal service 
B) police services 
C) social security 
D) food stamps 
E) a patent on a pharmaceutical drug

Question 6

The Coase theorem states that

Accepted Answer

A) the level of pollution should be equal to zero to maximize social net benefit. 
B) profit making producers pollute because they are forced to. 
C) the efficient level of output is where marginal external cost equals marginal external benefit. 
D) if property rights exist and transactions costs are low, private transactions are efficient. 
E) the best way to limit pollution is by taxing producers who pollute. 
A) the level of pollution should be equal to zero to maximize social net benefit. 
B) profit making producers pollute because they are forced to. 
C) the efficient level of output is where marginal external cost equals marginal external benefit. 
D) if property rights exist and transactions costs are low, private transactions are efficient. 
E) the best way to limit pollution is by taxing producers who pollute.

Question 7

-The figure shows the market for college education.In order for the efficient amount of education to occur, the government could provide a subsidy of ________ per student.

Accepted Answer

A) $4,000 
B) $8,000 
C) $12,000 
D) $20,000 
E) $16,000 
A) $4,000 
B) $8,000 
C) $12,000 
D) $20,000 
E) $16,000

Question 8

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year, then the marginal benefit will

Accepted Answer

A) exceed the marginal social cost. 
B) equal the marginal private cost. 
C) be less than the marginal social cost. 
D) will equal the marginal social cost. 
E) None of the above answers is correct. 
A) exceed the marginal social cost. 
B) equal the marginal private cost. 
C) be less than the marginal social cost. 
D) will equal the marginal social cost. 
E) None of the above answers is correct.

Question 9

If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the

Accepted Answer

A) marginal private cost equals the marginal private benefit. 
B) marginal social cost equals the marginal social benefit. 
C) marginal external cost equals the marginal external benefit. 
D) marginal private cost equals the tax. 
E) marginal social benefit exceeds the marginal social cost by as much as possible. 
A) marginal private cost equals the marginal private benefit. 
B) marginal social cost equals the marginal social benefit. 
C) marginal external cost equals the marginal external benefit. 
D) marginal private cost equals the tax. 
E) marginal social benefit exceeds the marginal social cost by as much as possible.

Question 10

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?

Accepted Answer

A) $0.18 
B) $0.10 
C) $0.08 
D) $0.02 
E) $0.80 
A) $0.18 
B) $0.10 
C) $0.08 
D) $0.02 
E) $0.80

Question 11

An example of someone bearing the burden of a negative consumption externality would be

Accepted Answer

A) Taylor living downwind from a feedlot. 
B) LaShawn grows beautiful roses in her garden. 
C) Jess's roommate smokes and she doesn't. 
D) All of these are examples of someone bearing the burden of a negative consumption externality. 
E) None of these is an example of someone bearing the burden of a negative consumption externality. 
A) Taylor living downwind from a feedlot. 
B) LaShawn grows beautiful roses in her garden. 
C) Jess's roommate smokes and she doesn't. 
D) All of these are examples of someone bearing the burden of a negative consumption externality. 
E) None of these is an example of someone bearing the burden of a negative consumption externality.

Question 12

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

Accepted Answer

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

Question 13

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

Accepted Answer

A) only a private cost. 
B) only an external cost. 
C) both a private cost and an external cost. 
D) neither a private cost nor an external cost. 
E) a private benefit because the neighbors get to hear the band. 
A) only a private cost. 
B) only an external cost. 
C) both a private cost and an external cost. 
D) neither a private cost nor an external cost. 
E) a private benefit because the neighbors get to hear the band.

Question 14

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is ________.

Accepted Answer

A) 13 million students per year; 16 million students per year 
B) 14 million students per year; 16 million students per year 
C) 10 million students per year; 14 million students per year 
D) 10 million students per year; 13 million students per year 
E) 14 million students per year; 10 million students per year 
A) 13 million students per year; 16 million students per year 
B) 14 million students per year; 16 million students per year 
C) 10 million students per year; 14 million students per year 
D) 10 million students per year; 13 million students per year 
E) 14 million students per year; 10 million students per year

Question 15

Explain the process by which a private subsidy corrects an external benefit.

Accepted Answer

If a good or service has an external ben

Question 16

When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________.

Accepted Answer

A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined

Question 17

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Accepted Answer

A) $4,000 
B) $8,000 
C) $12,000 
D) $16,000 
E) None of the above answers is correct. 
A) $4,000 
B) $8,000 
C) $12,000 
D) $16,000 
E) None of the above answers is correct.

Question 18

Marginal private cost

Accepted Answer

A) is always zero if there is an external cost. 
B) equals the marginal social cost only if the marginal external cost is positive. 
C) is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service. 
D) the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service. 
E) the cost of producing an additional unit of a good or service that is paid by the entire society. 
A) is always zero if there is an external cost. 
B) equals the marginal social cost only if the marginal external cost is positive. 
C) is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service. 
D) the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service. 
E) the cost of producing an additional unit of a good or service that is paid by the entire society.

Question 19

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

Accepted Answer

A) 2 million 
B) 4 million 
C) 6 million 
D) more than 6 million 
E) more than 4 million and less than 6 million 
A) 2 million 
B) 4 million 
C) 6 million 
D) more than 6 million 
E) more than 4 million and less than 6 million

Question 20

Pell grants are money given to students attending college.Pell grants are most closely similar to

Accepted Answer

A) public provision of a good. 
B) private subsidies given to producers of a good. 
C) vouchers given to consumers of a good. 
D) property rights assigned to consumers of a good. 
E) a subsidy given to the producer of a good. 
A) public provision of a good. 
B) private subsidies given to producers of a good. 
C) vouchers given to consumers of a good. 
D) property rights assigned to consumers of a good. 
E) a subsidy given to the producer of a good.

Cap-and-trade refers to

Which of the following is the best example of a good or service with an external benefit?

Marginal social benefit equals

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). -Based on the figure above, when the market is unregulated and is in equilibrium, the deadweight loss is

Which of the following is an example of a voucher?

The Coase theorem states that

-The figure shows the market for college education.In order for the efficient amount of education to occur, the government could provide a subsidy of ________ per student.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year, then the marginal benefit will

If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?

An example of someone bearing the burden of a negative consumption externality would be

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

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the number of students going to college is and the efficient number of students is .

Explain the process by which a private subsidy corrects an external benefit.

When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________.

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Marginal private cost

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

Pell grants are money given to students attending college.Pell grants are most closely similar to

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

Cap-and-trade refers to

Which of the following is the best example of a good or service with an external benefit?

Marginal social benefit equals

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). -Based on the figure above, when the market is unregulated and is in equilibrium, the deadweight loss is

Which of the following is an example of a voucher?

The Coase theorem states that

-The figure shows the market for college education.In order for the efficient amount of education to occur, the government could provide a subsidy of ________ per student.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year, then the marginal benefit will

If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?

An example of someone bearing the burden of a negative consumption externality would be

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

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-The figure above shows the market for college education in the United States.If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is ________.

Explain the process by which a private subsidy corrects an external benefit.

When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________.

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Marginal private cost

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?

Pell grants are money given to students attending college.Pell grants are most closely similar to

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 figure above shows the market for college education in the United States.If the government does not intervene in this market, the number of students going to college is and the efficient number of students is .