Question 1

Joanne rents a TV production studio to produce an extra hour of a TV show. The rent is

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) a private benefit because viewers will benefit from watching the extra hour of the show. 
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) a private benefit because viewers will benefit from watching the extra hour of the show.

Question 2

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (tons of paper) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { private cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { external cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { social cost } \
\text { (dollars) }
\end{array} \
\hline 100 & 10 & 5 & - - \
200 & 20 & 10 & - - \
300 & 30 & 15 & - - \
400 & 40 & 20 & - \
500 & 50 & 25 & - \
\hline
\end{array}$$
-The table above gives the private costs and external costs of producing paper.
a. Complete the table by finding the marginal social cost at each level of production.
b. If the market is competitive and is left unregulated and 400 tons of paper are produced, what is the price of a ton of paper?
c. If the government imposes a tax equal to the external cost at each level of production, what price would be charged if 400 tons are produced?

Accepted Answer

\[\begin{array} { c c c c } 
\begin{arra

Question 3

A landfill site produces an obnoxious odor. Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month. If the odor is the only detectable difference between two neighborhoods, the difference in the rent is the ________ of the odor.

Accepted Answer

A) social cost 
B) external cost 
C) private cost 
D) marginal cost-benefit 
E) private benefit 
A) social cost 
B) external cost 
C) private cost 
D) marginal cost-benefit 
E) private benefit

Question 4

-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 private benefit. There is no external benefit. The efficient number of concerts in Seattle is

Accepted Answer

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

Question 5

Burning coal to generate electricity can create pollution. If the market for generating electricity is competitive and is allowed to operate without any government intervention, is the equilibrium quantity of coal burned equal to, more than, or less than the efficient quantity?

Accepted Answer

The equilibrium quantity of coal burned

Question 6

The government can overcome the inefficiency created by a good with an external benefit by using

Accepted Answer

A) public provision. 
B) marketable permits. 
C) taxes. 
D) emission charges. 
E) None of the above answers is correct. 
A) public provision. 
B) marketable permits. 
C) taxes. 
D) emission charges. 
E) None of the above answers is correct.

Question 7

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The difference between the marginal cost curve and the marginal social cost curve equals

Accepted Answer

A) marginal private cost. 
B) private cost. 
C) external cost. 
D) marginal external cost. 
E) Coasian cost. 
A) marginal private cost. 
B) private cost. 
C) external cost. 
D) marginal external cost. 
E) Coasian cost.

Question 8

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution, the result is

Accepted Answer

A) a lower price. 
B) a smaller quantity produced. 
C) a smaller cost of production. 
D) a rightward shift of the supply curve. 
E) leftward shifts of the supply and demand curves. 
A) a lower price. 
B) a smaller quantity produced. 
C) a smaller cost of production. 
D) a rightward shift of the supply curve. 
E) leftward shifts of the supply and demand curves.

Question 9

Which of the following are devices that the government uses to achieve a more efficient allocation of resources in the presence of external benefits?

Accepted Answer

A) taxes, private subsidies, and regulation 
B) public provision, taxes, and private subsidies 
C) regulations, public provision, and vouchers 
D) vouchers, public provision, and private subsidies 
E) public provision, taxes, and vouchers 
A) taxes, private subsidies, and regulation 
B) public provision, taxes, and private subsidies 
C) regulations, public provision, and vouchers 
D) vouchers, public provision, and private subsidies 
E) public provision, taxes, and vouchers

Question 10

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect?
 Explain your answer.

Accepted Answer

The statement is incorrect. Ed

Question 11

List and briefly define the three methods government can use to cope with an external cost, such as pollution.

Accepted Answer

The three methods are pollution limits,

Question 12

-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 13

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

Accepted Answer

The statement is false. Extern

Question 14

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 15

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

Accepted Answer

A) Taylor living downwind from a smelly feedlot where pigs are raised. 
B) Jess's roommate smokes and she doesn't. 
C) Lynna's neighbors play loud music late at night. 
D) All of these are examples of someone bearing the burden of a negative production externality. 
E) None of these are examples of someone bearing the burden of a negative production externality. 
A) Taylor living downwind from a smelly feedlot where pigs are raised. 
B) Jess's roommate smokes and she doesn't. 
C) Lynna's neighbors play loud music late at night. 
D) All of these are examples of someone bearing the burden of a negative production externality. 
E) None of these are examples of someone bearing the burden of a negative production externality.

Question 16

Explain the difference between a positive production externality and a positive consumption externality.

Accepted Answer

A positive production externality occurs

Question 17

-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 18

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 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

An external cost in the production of a good creates a difference between the i. costs borne by the producer and the costs borne by society in general.
Ii. efficient quantity of output and the equilibrium quantity of output.
Iii. marginal social cost and the marginal private cost.

Accepted Answer

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

Joanne rents a TV production studio to produce an extra hour of a TV show. The rent is

A landfill site produces an obnoxious odor. Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month. If the odor is the only detectable difference between two neighborhoods, the difference in the rent is the ________ of the odor.

-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 private benefit. There is no external benefit. The efficient number of concerts in Seattle is

Burning coal to generate electricity can create pollution. If the market for generating electricity is competitive and is allowed to operate without any government intervention, is the equilibrium quantity of coal burned equal to, more than, or less than the efficient quantity?

The government can overcome the inefficiency created by a good with an external benefit by using

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The difference between the marginal cost curve and the marginal social cost curve equals

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution, the result is

Which of the following are devices that the government uses to achieve a more efficient allocation of resources in the presence of external benefits?

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

List and briefly define the three methods government can use to cope with an external cost, such as pollution.

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

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

Marginal social benefit equals

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

Explain the difference between a positive production externality and a positive consumption externality.

-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?

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 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?

An external cost in the production of a good creates a difference between the i. costs borne by the producer and the costs borne by society in general. Ii. efficient quantity of output and the equilibrium quantity of output. Iii. marginal social cost and the marginal private cost.

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

Joanne rents a TV production studio to produce an extra hour of a TV show. The rent is

A landfill site produces an obnoxious odor. Homes downwind of the site rent for $1000 per month while homes upwind of the site rent for $1500 per month. If the odor is the only detectable difference between two neighborhoods, the difference in the rent is the ________ of the odor.

-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 private benefit. There is no external benefit. The efficient number of concerts in Seattle is

Burning coal to generate electricity can create pollution. If the market for generating electricity is competitive and is allowed to operate without any government intervention, is the equilibrium quantity of coal burned equal to, more than, or less than the efficient quantity?

The government can overcome the inefficiency created by a good with an external benefit by using

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The difference between the marginal cost curve and the marginal social cost curve equals

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution, the result is

Which of the following are devices that the government uses to achieve a more efficient allocation of resources in the presence of external benefits?

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

List and briefly define the three methods government can use to cope with an external cost, such as pollution.

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

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

Marginal social benefit equals

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

Explain the difference between a positive production externality and a positive consumption externality.

-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?

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 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?

An external cost in the production of a good creates a difference between the i. costs borne by the producer and the costs borne by society in general. Ii. efficient quantity of output and the equilibrium quantity of output. Iii. marginal social cost and the marginal private cost.

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