Question 1

-The figure above shows the market for annual influenza immunizations the United States. The efficient quantity of immunizations is

Accepted Answer

A) 14 million per year. 
B) 10 million per year. 
C) Between 14 and 21 million per year. 
D) Less than 10 million per year. 
E) 22 million per year. 
A) 14 million per year. 
B) 10 million per year. 
C) Between 14 and 21 million per year. 
D) Less than 10 million per year. 
E) 22 million per year.

Question 2

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 3

Discuss the difference between a private cost and a social cost.

Accepted Answer

A private cost is the cost of producing

Question 4

The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as the

Accepted Answer

A) Coase theorem. 
B) property rights theorem. 
C) pollution rights theorem. 
D) emission rights theorem. 
E) private-market efficiency theorem. 
A) Coase theorem. 
B) property rights theorem. 
C) pollution rights theorem. 
D) emission rights theorem. 
E) private-market efficiency theorem.

Question 5

Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

Accepted Answer

A) pollution charge; marginal social cost 
B) pollution charge; marginal external cost 
C) pollution tax; marginal social cost 
D) pollution tax; marginal external cost 
E) pollution subsidy; marginal social cost 
A) pollution charge; marginal social cost 
B) pollution charge; marginal external cost 
C) pollution tax; marginal social cost 
D) pollution tax; marginal external cost 
E) pollution subsidy; marginal social cost

Question 6

The difference between private cost and social cost is that

Accepted Answer

A) social cost only considers the external cost borne by society. 
B) social cost only considers the cost borne by people other than the producer. 
C) private cost only considers the cost borne by producers of the good. 
D) social cost also includes any external benefit whereas private cost excludes all external benefits. 
E) there is no difference; the terms refer to the same cost. 
A) social cost only considers the external cost borne by society. 
B) social cost only considers the cost borne by people other than the producer. 
C) private cost only considers the cost borne by producers of the good. 
D) social cost also includes any external benefit whereas private cost excludes all external benefits. 
E) there is no difference; the terms refer to the same cost.

Question 7

-The figure above shows the market for polio vaccination in Pakistan. Polio vaccination confers an external benefit because one person's vaccination makes it less likely that other people will catch polio.
a. If the market is competitive and left unregulated, how many doses of vaccine will be administered?
b. If the Melinda and Bill Gates Foundation underwrites the cost of the vaccine by paying for a large fraction of the preparation and delivery cost, what will happen to the number of doses administered?
 Why?

Accepted Answer

a. If the market is competitive and left

Question 8

-The figure above shows the market for college education in the United States. If the government provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy per student equals ________ and each student pays ________ per year.

Accepted Answer

A) $16,000; $13,000 
B) $7,000; $13,000 
C) $5,000; $13,000 
D) $11,000; $16,000 
E) $5,000; $11,000 
A) $16,000; $13,000 
B) $7,000; $13,000 
C) $5,000; $13,000 
D) $11,000; $16,000 
E) $5,000; $11,000

Question 9

If a product has zero external costs, then

Accepted Answer

A) marginal social cost equals marginal private cost. 
B) marginal social cost is greater than marginal private cost. 
C) marginal social cost is less than marginal private cost. 
D) marginal social cost equals zero. 
E) We need more information to determine the relationship between marginal private cost and marginal social cost. 
A) marginal social cost equals marginal private cost. 
B) marginal social cost is greater than marginal private cost. 
C) marginal social cost is less than marginal private cost. 
D) marginal social cost equals zero. 
E) We need more information to determine the relationship between marginal private cost and marginal social cost.

Question 10

If the marginal private cost of running a car is $0.30 a mile and the marginal external cost is $0.10, what is the marginal social cost?

Accepted Answer

A) $0.20 
B) $3.00 
C) $0.03 
D) $0.40 
E) None of the above answers is correct. 
A) $0.20 
B) $3.00 
C) $0.03 
D) $0.40 
E) None of the above answers is correct.

Question 11

Suppose scientific research generates external benefits. Without government intervention, the market for scientific research would

Accepted Answer

A) produce the efficient amount. 
B) produce more than the efficient amount. 
C) produce some research, but less than the efficient amount. 
D) produce zero research. 
E) either produce more than or less than the efficient amount depending on whether the external benefit is on the production or consumption of the research. 
A) produce the efficient amount. 
B) produce more than the efficient amount. 
C) produce some research, but less than the efficient amount. 
D) produce zero research. 
E) either produce more than or less than the efficient amount depending on whether the external benefit is on the production or consumption of the research.

Question 12

-The figure above shows the market for education. Education has an external benefit.
a. If the market is competitive and left unregulated, how many students will be enrolled per year?
b. What is the efficient number of students?
c. In the figure, show the effect of a government subsidy that moves the market to the efficient number of students. What is the amount of the subsidy and what tuition must the students pay?

Accepted Answer

a. If the market is competitive and left

Question 13

A competitive, unregulated market would

Accepted Answer

A) produce too much pollution because pollution is an external cost. 
B) produce too little education because education has an external benefit. 
C) fail to achieve equilibrium if there are externalities present. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) produce too much pollution because pollution is an external cost. 
B) produce too little education because education has an external benefit. 
C) fail to achieve equilibrium if there are externalities present. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 14

If transactions costs are low, then assigning property rights in a market with external costs i. increases the deadweight loss.
Ii. means private transactions are efficient.
Iii. means that only consumers must pay the external costs.

Accepted Answer

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

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

Pollution is an example of a ________ externality.

Accepted Answer

A) negative production 
B) positive production 
C) negative consumption 
D) positive consumption 
E) Coasian 
A) negative production 
B) positive production 
C) negative consumption 
D) positive consumption 
E) Coasian

Question 17

If a good has an external cost, the

Accepted Answer

A) unregulated competitive market outcome is efficient. 
B) marginal private cost reflects the external cost. 
C) unregulated competitive market outcome is inefficient. 
D) marginal social benefit is equal to the marginal social cost when the market is in equilibrium. 
E) external benefit must equal the external cost. 
A) unregulated competitive market outcome is efficient. 
B) marginal private cost reflects the external cost. 
C) unregulated competitive market outcome is inefficient. 
D) marginal social benefit is equal to the marginal social cost when the market is in equilibrium. 
E) external benefit must equal the external cost.

Question 18

-Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

Accepted Answer

A) 0 tons 
B) 200 tons 
C) 300 tons 
D) more than 300 tons 
E) None of the above answers is correct. 
A) 0 tons 
B) 200 tons 
C) 300 tons 
D) more than 300 tons 
E) None of the above answers is correct.

Question 19

Education has an external benefit. So to achieve the efficient level of education, an education voucher must equal the difference between the

Accepted Answer

A) marginal (private)cost and the marginal social benefit. 
B) marginal (private)benefit and the marginal social benefit. 
C) marginal social benefit and the marginal (private)cost. 
D) dollar price and marginal (private)cost. 
E) marginal (private)cost and the marginal social cost. 
A) marginal (private)cost and the marginal social benefit. 
B) marginal (private)benefit and the marginal social benefit. 
C) marginal social benefit and the marginal (private)cost. 
D) dollar price and marginal (private)cost. 
E) marginal (private)cost and the marginal social cost.

Question 20

Explain the difference between marginal social benefit and marginal external benefit.

Accepted Answer

Marginal social benefit equals the margi

-The figure above shows the market for annual influenza immunizations the United States. The efficient quantity of immunizations is

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

Discuss the difference between a private cost and a social cost.

The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as the

Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a that equals the of the pollution.

The difference between private cost and social cost is that

-The figure above shows the market for college education in the United States. If the government provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy per student equals and each student pays per year.

If a product has zero external costs, then

If the marginal private cost of running a car is $0.30 a mile and the marginal external cost is $0.10, what is the marginal social cost?

Suppose scientific research generates external benefits. Without government intervention, the market for scientific research would

A competitive, unregulated market would

If transactions costs are low, then assigning property rights in a market with external costs i. increases the deadweight loss. Ii. means private transactions are efficient. Iii. means that only consumers must pay the external costs.

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

Pollution is an example of a ________ externality.

If a good has an external cost, the

-Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

Education has an external benefit. So to achieve the efficient level of education, an education voucher must equal the difference between the

Explain the difference between marginal social benefit and marginal external benefit.

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

-The figure above shows the market for annual influenza immunizations the United States. The efficient quantity of immunizations is

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

Discuss the difference between a private cost and a social cost.

The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as the

Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

The difference between private cost and social cost is that

-The figure above shows the market for college education in the United States. If the government provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy per student equals ________ and each student pays ________ per year.

If a product has zero external costs, then

If the marginal private cost of running a car is $0.30 a mile and the marginal external cost is $0.10, what is the marginal social cost?

Suppose scientific research generates external benefits. Without government intervention, the market for scientific research would

A competitive, unregulated market would

If transactions costs are low, then assigning property rights in a market with external costs i. increases the deadweight loss. Ii. means private transactions are efficient. Iii. means that only consumers must pay the external costs.

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

Pollution is an example of a ________ externality.

If a good has an external cost, the

-Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

Education has an external benefit. So to achieve the efficient level of education, an education voucher must equal the difference between the

Explain the difference between marginal social benefit and marginal external benefit.

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

Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a that equals the of the pollution.

-The figure above shows the market for college education in the United States. If the government provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy per student equals and each student pays per year.

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