Question 1

Food stamps provided by the government to households are an example of

Accepted Answer

A) vouchers. 
B) marginal benefits from producing a good or service. 
C) marginal cost from producing a good or service. 
D) marginal external cost. 
E) a government good. 
A) vouchers. 
B) marginal benefits from producing a good or service. 
C) marginal cost from producing a good or service. 
D) marginal external cost. 
E) a government good.

Question 2

Suppose two neighborhoods (A and B)have identical housing, but neighborhood A has a strictly enforced deed restriction that prohibits homeowners from parking junk cars in the front yard. If houses in neighborhood A sell for $105,000 and houses in neighborhood B sell for $100,000, how would an economist value the external cost of visible junk cars, per house?

Accepted Answer

A) $205,000 
B) $105,000 
C) $100,000 
D) $5,000 
A) $205,000 
B) $105,000 
C) $100,000 
D) $5,000

Question 3

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

Accepted Answer

A) $24 million. 
B) $16 million. 
C) $8 million. 
D) more than $24 million. 
E) less than $8 million. 
A) $24 million. 
B) $16 million. 
C) $8 million. 
D) more than $24 million. 
E) less than $8 million.

Question 4

If there is no external cost, then marginal social cost

Accepted Answer

A) increases as output increases. 
B) decreases as output increases. 
C) is constant regardless of the level of output. 
D) is unrelated to output levels. 
E) first increases and then decreases as output increases. 
A) increases as output increases. 
B) decreases as output increases. 
C) is constant regardless of the level of output. 
D) is unrelated to output levels. 
E) first increases and then decreases as output increases.

Question 5

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

Accepted Answer

A) removing property rights 
B) subsidizing production 
C) marketable permits 
D) running a lottery 
E) imposing Coasian taxes 
A) removing property rights 
B) subsidizing production 
C) marketable permits 
D) running a lottery 
E) imposing Coasian taxes

Question 6

Private subsidies granted to producers affect

Accepted Answer

A) the supply side of the market by shifting the supply curve. 
B) the demand side of the market by shifting the demand curve. 
C) property rights. 
D) transaction costs. 
E) both the supply side of the market and the demand side because they shift both the supply curve and the demand curve. 
A) the supply side of the market by shifting the supply curve. 
B) the demand side of the market by shifting the demand curve. 
C) property rights. 
D) transaction costs. 
E) both the supply side of the market and the demand side because they shift both the supply curve and the demand curve.

Question 7

External benefits are the extra

Accepted Answer

A) benefits a consumer gets from consuming a good. 
B) costs a producer creates in producing a good. 
C) benefits that accrue to people other than the consumers. 
D) costs a producer bears for producing a polluting good. 
E) benefits a producer obtains for reducing production of a polluting good. 
A) benefits a consumer gets from consuming a good. 
B) costs a producer creates in producing a good. 
C) benefits that accrue to people other than the consumers. 
D) costs a producer bears for producing a polluting good. 
E) benefits a producer obtains for reducing production of a polluting good.

Question 8

The benefit the consumer of a good or service receives is the

Accepted Answer

A) social benefit. 
B) external benefit. 
C) private benefit. 
D) public benefit. 
E) consumption benefit. 
A) social benefit. 
B) external benefit. 
C) private benefit. 
D) public benefit. 
E) consumption benefit.

Question 9

When the production of a good has a marginal external cost, which of the following occurs in an unregulated market?
I. Overproduction relative to the efficient level will occur.
Ii. The market price is less than the marginal social cost at the equilibrium quantity.
Iii. A deadweight loss occurs.

Accepted Answer

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

Question 10

-The figure above shows the market for annual influenza immunizations the United States. If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people, the amount of the subsidy is ________ per person.

Accepted Answer

A) $25 
B) $50 
C) $35 
D) $15 
E) $40 
A) $25 
B) $50 
C) $35 
D) $15 
E) $40

Question 11

-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 12

Cap-and-trade refers to

Accepted Answer

A) capping emissions and issuing tradable 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 tradable 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 13

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 14

Which of the following is an example of a product that is made available through public provision?
I. local police protection
Ii. public schools
Iii. local fire department

Accepted Answer

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

Question 15

-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 16

Evidence of external costs in the production of a product is present if

Accepted Answer

A) the price of the product is higher than it should be. 
B) the production cost increases because of an increase in the minimum wage. 
C) non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D) buyers refuse to purchase the product. 
E) producers pay all of the costs of producing the good or service. 
A) the price of the product is higher than it should be. 
B) the production cost increases because of an increase in the minimum wage. 
C) non-buyers and/or non-producers of the product experience a loss for which they are not compensated. 
D) buyers refuse to purchase the product. 
E) producers pay all of the costs of producing the good or service.

Question 17

-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 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 the market for annual influenza immunizations the United States. If there is NO external benefit from health care and the government does not intervene in the market, then the equilibrium price of immunizations is

Accepted Answer

A) $30. 
B) $20. 
C) $40. 
D) $60. 
E) $70. 
A) $30. 
B) $20. 
C) $40. 
D) $60. 
E) $70.

Question 20

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

Accepted Answer

A) 0 
B) 4 tons 
C) 6 tons 
D) More than 6 tons 
E) None of the above answers is correct. 
A) 0 
B) 4 tons 
C) 6 tons 
D) More than 6 tons 
E) None of the above answers is correct.

Food stamps provided by the government to households are an example of

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

If there is no external cost, then marginal social cost

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

Private subsidies granted to producers affect

External benefits are the extra

The benefit the consumer of a good or service receives is the

When the production of a good has a marginal external cost, which of the following occurs in an unregulated market? I. Overproduction relative to the efficient level will occur. Ii. The market price is less than the marginal social cost at the equilibrium quantity. Iii. A deadweight loss occurs.

-The figure above shows the market for annual influenza immunizations the United States. If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people, the amount of the subsidy is ________ per person.

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

Cap-and-trade refers to

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

Which of the following is an example of a product that is made available through public provision? I. local police protection Ii. public schools Iii. local fire department

-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.

Evidence of external costs in the production of a product is present if

-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.

Marginal private cost

-The figure above shows the market for annual influenza immunizations the United States. If there is NO external benefit from health care and the government does not intervene in the market, then the equilibrium price of immunizations is

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 9: Externalities: Pollution, Education, and Health Care

Food stamps provided by the government to households are an example of

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

If there is no external cost, then marginal social cost

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

Private subsidies granted to producers affect

External benefits are the extra

The benefit the consumer of a good or service receives is the

When the production of a good has a marginal external cost, which of the following occurs in an unregulated market? I. Overproduction relative to the efficient level will occur. Ii. The market price is less than the marginal social cost at the equilibrium quantity. Iii. A deadweight loss occurs.

-The figure above shows the market for annual influenza immunizations the United States. If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people, the amount of the subsidy is ________ per person.

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

Cap-and-trade refers to

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

Which of the following is an example of a product that is made available through public provision? I. local police protection Ii. public schools Iii. local fire department

-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.

Evidence of external costs in the production of a product is present if

-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.

Marginal private cost

-The figure above shows the market for annual influenza immunizations the United States. If there is NO external benefit from health care and the government does not intervene in the market, then the equilibrium price of immunizations is

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

-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.