Question 1

Harry, the owner of a beauty salon, hires a new hair stylist. The wages paid to the new stylist are

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) only a private benefit because people want their hair styled. 
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) only a private benefit because people want their hair styled.

Question 2

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

Accepted Answer

A) ten cents 
B) nineteen cents 
C) four cents 
D) zero cents 
E) fourteen cents 
A) ten cents 
B) nineteen cents 
C) four cents 
D) zero cents 
E) fourteen cents

Question 3

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

Accepted Answer

A) The quantity supplied along the firm's supply curve increases. 
B) The firm's demand curve shifts leftward. 
C) The firm's supply curve shifts rightward. 
D) The firm's supply curve shifts leftward. 
E) Both the supply curve and the demand curve shift leftward. 
A) The quantity supplied along the firm's supply curve increases. 
B) The firm's demand curve shifts leftward. 
C) The firm's supply curve shifts rightward. 
D) The firm's supply curve shifts leftward. 
E) Both the supply curve and the demand curve shift leftward.

Question 4

Legally established titles to ownership, use, and disposal of factors of production and goods and services, are called ________ rights.

Accepted Answer

A) government 
B) pollution 
C) property 
D) inefficient 
E) private 
A) government 
B) pollution 
C) property 
D) inefficient 
E) private

Question 5

What is marginal external cost?
 Give an example.

Accepted Answer

Marginal external cost is the additional

Question 6

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

Accepted Answer

A) property rights. 
B) Coase rights. 
C) pollution rights. 
D) emission rights. 
E) price-setting rights. 
A) property rights. 
B) Coase rights. 
C) pollution rights. 
D) emission rights. 
E) price-setting rights.

Question 7

If a good has an external cost, then the marginal private cost curve

Accepted Answer

A) lies below then the marginal social cost curve. 
B) lies above the marginal social cost curve. 
C) lies below the horizontal axis. 
D) is the same as the marginal external cost curve. 
E) is undefined because the firms' costs are not equal to the social costs. 
A) lies below then the marginal social cost curve. 
B) lies above the marginal social cost curve. 
C) lies below the horizontal axis. 
D) is the same as the marginal external cost curve. 
E) is undefined because the firms' costs are not equal to the social costs.

Question 8

The use of vouchers for education

Accepted Answer

A) decreases the demand for education and increases the equilibrium quantity. 
B) increases the demand for education and increases the equilibrium quantity. 
C) increases the deadweight loss for those who can't afford schooling. 
D) decreases the quantity provided to the efficient level. 
E) decreases the demand for education and decreases the equilibrium quantity. 
A) decreases the demand for education and increases the equilibrium quantity. 
B) increases the demand for education and increases the equilibrium quantity. 
C) increases the deadweight loss for those who can't afford schooling. 
D) decreases the quantity provided to the efficient level. 
E) decreases the demand for education and decreases the equilibrium quantity.

Question 9

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).
-Using the figure above, suppose education is provided by public colleges. At what level should tuition be set to ensure the efficient number of students?

Accepted Answer

A) $10,000 
B) $5,000 
C) $20,000 
D) $25,000 
E) $15,000 
A) $10,000 
B) $5,000 
C) $20,000 
D) $25,000 
E) $15,000

Question 10

When a forest is logged, it is possible for the logging to create "soil runoff," a situation in which the soil, no longer protected by trees, erodes and silts a river miles downstream from the logging area. Is soil runoff created by logging in Montana that ruins a river an example of a private cost to the lumbering company or an external cost?

Accepted Answer

The soil runoff is an external cost. The

Question 11

When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as

Accepted Answer

A) an external benefit. 
B) an external cost. 
C) a marginal cost. 
D) an equilibrium social output. 
E) a Coasian good. 
A) an external benefit. 
B) an external cost. 
C) a marginal cost. 
D) an equilibrium social output. 
E) a Coasian good.

Question 12

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

Accepted Answer

The marginal social cost equals the marg

Question 13

A payment made by the government to private producers of roads and libraries would be an example of

Accepted Answer

A) a subsidy. 
B) a copyright. 
C) a voucher. 
D) public provision. 
E) a Coase payment. 
A) a subsidy. 
B) a copyright. 
C) a voucher. 
D) public provision. 
E) a Coase payment.

Question 14

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 15

-The figure above shows the market for steel, the production of which creates pollution.
a. What point represents the equilibrium price and what point represents the equilibrium quantity in an unregulated, competitive market?
b. What area represents the deadweight loss of the unregulated, competitive market outcome?
c. What point represents the efficient quantity?
d. If the output level in part (c)was achieved through the use of a government imposed tax, what price would consumers pay?
 What price would the producers receive?
 What distance represents the amount of the tax?
e. If government successfully uses marketable permits to eliminate the external cost, what point represents how much output would be produced?

Accepted Answer

a. The price is given by point c and the

Question 16

A government subsidy

Accepted Answer

A) is a policy that can be used to help eliminate the deadweight loss from an external cost. 
B) can help achieve an efficient amount of output when the good has an external benefit. 
C) increases consumers' marginal benefit from the good. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) is a policy that can be used to help eliminate the deadweight loss from an external cost. 
B) can help achieve an efficient amount of output when the good has an external benefit. 
C) increases consumers' marginal benefit from the good. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 17

The production of paper creates pollution, an external cost. What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

Accepted Answer

When the government imposes a tax equal

Question 18

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

Accepted Answer

A) total private benefit. 
B) net gain. 
C) total external benefit. 
D) marginal social benefit. 
E) total Coase benefit. 
A) total private benefit. 
B) net gain. 
C) total external benefit. 
D) marginal social benefit. 
E) total Coase benefit.

Question 19

The benefit that Joan gets from eating cherries is an example of

Accepted Answer

A) when the external benefit equals the private benefit. 
B) a private benefit. 
C) an external benefit. 
D) an external cost. 
E) the marginal social cost of eating cherries. 
A) when the external benefit equals the private benefit. 
B) a private benefit. 
C) an external benefit. 
D) an external cost. 
E) the marginal social cost of eating cherries.

Question 20

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

Harry, the owner of a beauty salon, hires a new hair stylist. The wages paid to the new stylist are

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

Legally established titles to ownership, use, and disposal of factors of production and goods and services, are called ________ rights.

What is marginal external cost? Give an example.

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

If a good has an external cost, then the marginal private cost curve

The use of vouchers for education

When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

A payment made by the government to private producers of roads and libraries would be an example of

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

A government subsidy

The production of paper creates pollution, an external cost. What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

The benefit that Joan gets from eating cherries is an example of

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

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

Harry, the owner of a beauty salon, hires a new hair stylist. The wages paid to the new stylist are

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?

Legally established titles to ownership, use, and disposal of factors of production and goods and services, are called ________ rights.

What is marginal external cost? Give an example.

Legally established titles to the ownership, use, and disposal of factors of production are referred to as

If a good has an external cost, then the marginal private cost curve

The use of vouchers for education

When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

A payment made by the government to private producers of roads and libraries would be an example of

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

A government subsidy

The production of paper creates pollution, an external cost. What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

The benefit that Joan gets from eating cherries is an example of

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

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

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