Question 1

One characteristic of a public good is that it

Accepted Answer

A) is available for consumption by only a few individuals at any particular time. 
B) always eliminates the free-rider problem. 
C) can be consumed simultaneously by many individuals. 
D) can be easily subdivided into small units. 
A) is available for consumption by only a few individuals at any particular time. 
B) always eliminates the free-rider problem. 
C) can be consumed simultaneously by many individuals. 
D) can be easily subdivided into small units.

Question 2

Which of the following statements is TRUE about the difference between a public and private good?

Accepted Answer

A) Both public and private goods are owned by individuals but public goods can be shared while private goods cannot be shared. 
B) The government produces private goods while corporations produce public goods. 
C) Consumption of a private good by one person reduces the amount available for others while the consumption of a public good does not reduce the amount available for others. 
D) Resources are used to produce private goods but are not used to produce public goods. 
A) Both public and private goods are owned by individuals but public goods can be shared while private goods cannot be shared. 
B) The government produces private goods while corporations produce public goods. 
C) Consumption of a private good by one person reduces the amount available for others while the consumption of a public good does not reduce the amount available for others. 
D) Resources are used to produce private goods but are not used to produce public goods.

Question 3

In the United States, which of the following is an example of a government-sponsored good?

Accepted Answer

A) wireless networks 
B) concerts 
C) cigarettes 
D) marijuana 
A) wireless networks 
B) concerts 
C) cigarettes 
D) marijuana

Question 4

Explain what economic efficiency is. How does a price system lead to economic efficiency?

Accepted Answer

Market failure is a situation in which a

Question 5

If the government wishes to correct the existence of positive externality, it could

Accepted Answer

A) grant subsidies to consumers to stimulate demand. 
B) impose a tax on the producers to stimulate supply. 
C) impose taxes on consumers to stimulate demand. 
D) grant subsidies to producers to reduce supply. 
A) grant subsidies to consumers to stimulate demand. 
B) impose a tax on the producers to stimulate supply. 
C) impose taxes on consumers to stimulate demand. 
D) grant subsidies to producers to reduce supply.

Question 6

An externality is

Accepted Answer

A) a third-party benefit or cost that is associated with the production of a good. 
B) when external forces such as war or flood affect the market. 
C) government intervention in the markets. 
D) transaction costs. 
A) a third-party benefit or cost that is associated with the production of a good. 
B) when external forces such as war or flood affect the market. 
C) government intervention in the markets. 
D) transaction costs.

Question 7

U.S. antitrust laws view monopolies as undesirable because

Accepted Answer

A) monopolies restrain trade and promote inefficiencies. 
B) monopolies create inferior products. 
C) monopolies produce only capital goods. 
D) monopolies produce only cheap, low quality goods. 
A) monopolies restrain trade and promote inefficiencies. 
B) monopolies create inferior products. 
C) monopolies produce only capital goods. 
D) monopolies produce only cheap, low quality goods.

Question 8

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Accepted Answer

A) was established in the Declaration of Independence. 
B) is a relatively new idea that developed in the years during and after the Great Depression. 
C) has been around since the early 1700s. 
D) developed during World War I. 
A) was established in the Declaration of Independence. 
B) is a relatively new idea that developed in the years during and after the Great Depression. 
C) has been around since the early 1700s. 
D) developed during World War I.

Question 9

Under present U.S. law, cocaine is an example of

Accepted Answer

A) a government-sponsored good. 
B) a capital good. 
C) a public good. 
D) a government-inhibited good. 
A) a government-sponsored good. 
B) a capital good. 
C) a public good. 
D) a government-inhibited good.

Question 10

An effluent fee

Accepted Answer

A) is a reward to companies using production methods that create positive externalities. 
B) is also called a pollution subsidy. 
C) gives a firm the right to pollute if it pays a tax on what it discharges. 
D) is intended to influence the market by increasing supply and decreasing price. 
A) is a reward to companies using production methods that create positive externalities. 
B) is also called a pollution subsidy. 
C) gives a firm the right to pollute if it pays a tax on what it discharges. 
D) is intended to influence the market by increasing supply and decreasing price.

Question 11

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

Accepted Answer

Medicare reduces the price that the elde

Question 12

What is the purpose of antitrust legislation?

Accepted Answer

Antitrust legislation makes illegal cert

Question 13

Pollution is caused by a market failure, in an industry in which there is

Accepted Answer

A) unemployment. 
B) an over-allocation of resources in production. 
C) excess demand. 
D) excessive cost borne by the firm. 
A) unemployment. 
B) an over-allocation of resources in production. 
C) excess demand. 
D) excessive cost borne by the firm.

Question 14

A price system is considered to be efficient when

Accepted Answer

A) it fails to have the goods that consumers want. 
B) an underground market develops. 
C) all resources are allocated to the highest-valued uses. 
D) firms produce more than what consumers want. 
A) it fails to have the goods that consumers want. 
B) an underground market develops. 
C) all resources are allocated to the highest-valued uses. 
D) firms produce more than what consumers want.

Question 15

Which of the following is an example of a positive externality?

Accepted Answer

A) a neighbor's flower garden that you enjoy seeing 
B) traffic congestion 
C) an increased supply of chocolate lowers chocolate prices for all consumers 
D) pollution 
A) a neighbor's flower garden that you enjoy seeing 
B) traffic congestion 
C) an increased supply of chocolate lowers chocolate prices for all consumers 
D) pollution

Question 16

All of the following illustrate how government can correct for positive externalities EXCEPT

Accepted Answer

A) subsidies. 
B) regulation. 
C) government financing and production. 
D) charging effluent fees. 
A) subsidies. 
B) regulation. 
C) government financing and production. 
D) charging effluent fees.

Question 17

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

Accepted Answer

A) special subsidies. 
B) regulation fees. 
C) external costs. 
D) effluent fees. 
A) special subsidies. 
B) regulation fees. 
C) external costs. 
D) effluent fees.

Question 18

A difference between the market and the public sector is that

Accepted Answer

A) scarcity exists only in the market sector. 
B) government can use force, while the market does not. 
C) we can only vote in the public sector. 
D) the cost of private goods to society is zero. 
A) scarcity exists only in the market sector. 
B) government can use force, while the market does not. 
C) we can only vote in the public sector. 
D) the cost of private goods to society is zero.

Question 19

-In the above figure, the total dollar amount of the Medicare subsidies provided by the government is equal to

Accepted Answer

A) the difference between Ps and P₀ multiplied by QM. 
B) the difference between Ps and Pd multiplied by QM. 
C) the difference between P₀ and Pd multiplied by Qd. 
D) the difference between Ps and Pd multiplied by Q₀. 
A) the difference between Ps and P₀ multiplied by QM. 
B) the difference between Ps and Pd multiplied by QM. 
C) the difference between P₀ and Pd multiplied by Qd. 
D) the difference between Ps and Pd multiplied by Q₀.

Question 20

Which of the following is an example of a negative externality?

Accepted Answer

A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B) The opening of a new shopping mall increases the business of nearby restaurants. 
C) A consumer pays a higher price than another consumer does for the same product. 
D) Consumers pay a sales tax in addition to the price of a product. 
A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B) The opening of a new shopping mall increases the business of nearby restaurants. 
C) A consumer pays a higher price than another consumer does for the same product. 
D) Consumers pay a sales tax in addition to the price of a product.

One characteristic of a public good is that it

Which of the following statements is TRUE about the difference between a public and private good?

In the United States, which of the following is an example of a government-sponsored good?

Explain what economic efficiency is. How does a price system lead to economic efficiency?

If the government wishes to correct the existence of positive externality, it could

An externality is

U.S. antitrust laws view monopolies as undesirable because

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Under present U.S. law, cocaine is an example of

An effluent fee

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

What is the purpose of antitrust legislation?

Pollution is caused by a market failure, in an industry in which there is

A price system is considered to be efficient when

Which of the following is an example of a positive externality?

All of the following illustrate how government can correct for positive externalities EXCEPT

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

A difference between the market and the public sector is that

-In the above figure, the total dollar amount of the Medicare subsidies provided by the government is equal to

Which of the following is an example of a negative externality?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

One characteristic of a public good is that it

Which of the following statements is TRUE about the difference between a public and private good?

In the United States, which of the following is an example of a government-sponsored good?

Explain what economic efficiency is. How does a price system lead to economic efficiency?

If the government wishes to correct the existence of positive externality, it could

An externality is

U.S. antitrust laws view monopolies as undesirable because

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Under present U.S. law, cocaine is an example of

An effluent fee

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

What is the purpose of antitrust legislation?

Pollution is caused by a market failure, in an industry in which there is

A price system is considered to be efficient when

Which of the following is an example of a positive externality?

All of the following illustrate how government can correct for positive externalities EXCEPT

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

A difference between the market and the public sector is that

-In the above figure, the total dollar amount of the Medicare subsidies provided by the government is equal to

Which of the following is an example of a negative externality?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters