Question 1

The marginal social cost of production is the

Accepted Answer

A)  marginal private cost plus the marginal external cost. 
B)  same as the marginal cost of any externality. 
C)  total cost of any externality. 
D)  marginal private cost minus the marginal external cost. 
A)  marginal private cost plus the marginal external cost. 
B)  same as the marginal cost of any externality. 
C)  total cost of any externality. 
D)  marginal private cost minus the marginal external cost.

Question 2

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax

Accepted Answer

A)  achieves the competitive equilibrium. 
B)  forces producers to face all costs of production including the external cost. 
C)  ensures greater profits for the firm. 
D)  eliminates all pollution. 
A)  achieves the competitive equilibrium. 
B)  forces producers to face all costs of production including the external cost. 
C)  ensures greater profits for the firm. 
D)  eliminates all pollution.

Question 3

If the marginal external cost of building a children's playground equals zero, then the

Accepted Answer

A)  marginal private cost equals the marginal social cost. 
B)  marginal social cost equals zero. 
C)  marginal private cost equals zero. 
D)  None of the above answers is correct. 
A)  marginal private cost equals the marginal social cost. 
B)  marginal social cost equals zero. 
C)  marginal private cost equals zero. 
D)  None of the above answers is correct.

Question 4

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

Accepted Answer

A)  $6,000 per year 
B)  $12,000 per year 
C)  $18,000 per year 
D)  $27,000 per year 
A)  $6,000 per year 
B)  $12,000 per year 
C)  $18,000 per year 
D)  $27,000 per year

Question 5

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. What is the efficient amount of education?

Accepted Answer

A)  40,000 student-years 
B)  60,000 student-years 
C)  80,000 student-years 
D)  100,000 student-years 
A)  40,000 student-years 
B)  60,000 student-years 
C)  80,000 student-years 
D)  100,000 student-years

Question 6

The benefit from an additional unit of a good or service that society receives from the consumption of that good or service is the

Accepted Answer

A)  marginal private benefit. 
B)  marginal external benefit. 
C)  marginal social benefit. 
D)  opportunity cost. 
A)  marginal private benefit. 
B)  marginal external benefit. 
C)  marginal social benefit. 
D)  opportunity cost.

Question 7

-In the above figure, the efficient quantity is

Accepted Answer

A)  0 units. 
B)  70 units. 
C)  80 units. 
D)  100 units. 
A)  0 units. 
B)  70 units. 
C)  80 units. 
D)  100 units.

Question 8

-In the above figure, to achieve the efficient amount of paper production, the government could impose a tax of

Accepted Answer

A)  $2 per ton. 
B)  $8 per ton. 
C)  $26 per ton. 
D)  zero, because the efficient amount is produced with no government intervention. 
A)  $2 per ton. 
B)  $8 per ton. 
C)  $26 per ton. 
D)  zero, because the efficient amount is produced with no government intervention.

Question 9

________ played a large role is removing lead from the atmosphere in the United States.

Accepted Answer

A)  Pigovian taxes 
B)  The Coase Theorem 
C)  Emissions charges 
D)  Marketable permits 
A)  Pigovian taxes 
B)  The Coase Theorem 
C)  Emissions charges 
D)  Marketable permits

Question 10

The catch of American lobster off the shores of New England is regulated using quotas. If the quota is set correctly, then at this quantity, the marginal social cost ________ the marginal social benefit.

Accepted Answer

A)  is less than 
B)  is greater than 
C)  is not comparable to 
D)  equals 
A)  is less than 
B)  is greater than 
C)  is not comparable to 
D)  equals

Question 11

-The amount of the external marginal cost per ton illustrated in the above figure is

Accepted Answer

A)  $8.00 per ton. 
B)  $12.00 per ton. 
C)  $16.00 per ton. 
D)  zero because no external cost is illustrated. 
A)  $8.00 per ton. 
B)  $12.00 per ton. 
C)  $16.00 per ton. 
D)  zero because no external cost is illustrated.

Question 12

If production of a good creates an external cost, the amount of output where the marginal social benefit equals the marginal private cost is

Accepted Answer

A)  inefficient. 
B)  inequitable. 
C)  unattainable. 
D)  efficient. 
A)  inefficient. 
B)  inequitable. 
C)  unattainable. 
D)  efficient.

Question 13

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government does not intervene, and the colleges are competitive, ________ million students are enrolled, and the tuition is ________ per year.

Accepted Answer

A)  0.8; $7,000 
B)  0.6; $6,000 
C)  0.6; $9,000 
D)  0.8; $5,000 
A)  0.8; $7,000 
B)  0.6; $6,000 
C)  0.6; $9,000 
D)  0.8; $5,000

Question 14

When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that

Accepted Answer

A)  MC + tax = MSC. 
B)  MC - tax = MSB. 
C)  MB + tax = MSC. 
D)  MB - tax = MSB. 
A)  MC + tax = MSC. 
B)  MC - tax = MSB. 
C)  MB + tax = MSC. 
D)  MB - tax = MSB.

Question 15

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, there is an

Accepted Answer

A)  external marginal benefit of $2. 
B)  external marginal cost of $2. 
C)  external marginal benefit of $1. 
D)  external marginal cost of $3. 
A)  external marginal benefit of $2. 
B)  external marginal cost of $2. 
C)  external marginal benefit of $1. 
D)  external marginal cost of $3.

Question 16

When CSU sophomore Cody Clow and his housemates chose not to heed the city's ordinance against unreasonable noise and host a loud party at their off-campus residence last fall, they were confronted and ticketed by police. Fort Collins city code describes unreasonable noise as any sound that will "unreasonably interfere with the enjoyment of life or property." What is TRUE about this situation?

Accepted Answer

A)  Marginal external costs are positive. 
B)  Marginal external costs are negative. 
C)  Marginal external benefits are positive. 
D)  Marginal external benefits are negative. 
A)  Marginal external costs are positive. 
B)  Marginal external costs are negative. 
C)  Marginal external benefits are positive. 
D)  Marginal external benefits are negative.

Question 17

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient outcome is raising ________.

Accepted Answer

A)  0 goats 
B)  40 goats 
C)  50 goats 
D)  55 goats 
A)  0 goats 
B)  40 goats 
C)  50 goats 
D)  55 goats

Question 18

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that

Accepted Answer

A)  polluters are taxed on the amount of pollution they discharge. 
B)  emission charges are established by the government. 
C)  each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution. 
D)  only some producers pollute and the others go out of business. 
A)  polluters are taxed on the amount of pollution they discharge. 
B)  emission charges are established by the government. 
C)  each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution. 
D)  only some producers pollute and the others go out of business.

Question 19

-If the government regulates the market in the above figure in a way to achieve efficiency, then ________ tons of paper will be produced and consumed.

Accepted Answer

A)  0 
B)  100 
C)  200 
D)  None of the above answers is correct. 
A)  0 
B)  100 
C)  200 
D)  None of the above answers is correct.

Question 20

-The table above shows the marginal costs and marginal benefits of college education. If 8 million students are enrolled, the marginal external benefit is

Accepted Answer

A)  zero. 
B)  $4,000. 
C)  $5,000. 
D)  $7,000. 
A)  zero. 
B)  $4,000. 
C)  $5,000. 
D)  $7,000.

The marginal social cost of production is the

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax

If the marginal external cost of building a children's playground equals zero, then the

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

The benefit from an additional unit of a good or service that society receives from the consumption of that good or service is the

-In the above figure, the efficient quantity is

-In the above figure, to achieve the efficient amount of paper production, the government could impose a tax of

________ played a large role is removing lead from the atmosphere in the United States.

The catch of American lobster off the shores of New England is regulated using quotas. If the quota is set correctly, then at this quantity, the marginal social cost ________ the marginal social benefit.

-The amount of the external marginal cost per ton illustrated in the above figure is

If production of a good creates an external cost, the amount of output where the marginal social benefit equals the marginal private cost is

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government does not intervene, and the colleges are competitive, million students are enrolled, and the tuition is per year.

When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, there is an

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient outcome is raising ________.

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that

-If the government regulates the market in the above figure in a way to achieve efficiency, then ________ tons of paper will be produced and consumed.

-The table above shows the marginal costs and marginal benefits of college education. If 8 million students are enrolled, the marginal external benefit is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

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Exam 17: Externalities

The marginal social cost of production is the

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax

If the marginal external cost of building a children's playground equals zero, then the

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

The benefit from an additional unit of a good or service that society receives from the consumption of that good or service is the

-In the above figure, the efficient quantity is

-In the above figure, to achieve the efficient amount of paper production, the government could impose a tax of

________ played a large role is removing lead from the atmosphere in the United States.

The catch of American lobster off the shores of New England is regulated using quotas. If the quota is set correctly, then at this quantity, the marginal social cost ________ the marginal social benefit.

-The amount of the external marginal cost per ton illustrated in the above figure is

If production of a good creates an external cost, the amount of output where the marginal social benefit equals the marginal private cost is

When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, there is an

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient outcome is raising ________.

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that

-If the government regulates the market in the above figure in a way to achieve efficiency, then ________ tons of paper will be produced and consumed.

-The table above shows the marginal costs and marginal benefits of college education. If 8 million students are enrolled, the marginal external benefit is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters