Question 1

-In Figure 22.1, which area represents total variable cost to the drug dealer?

Accepted Answer

A) OACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) OACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* C

Question 2

-In Figure 22.2, which area represents total value to the smoker?

Accepted Answer

A) 0ACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) 0ACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* A

Question 3

An example of an external cost of tobacco is

Accepted Answer

A) lung cancer to smokers. 
B) increased SIDS deaths to the children of smokers. 
C) increase life insurance premiums of smokers. 
D) accidental fires in the homes of smokers. 
A) lung cancer to smokers. 
B) increased SIDS deaths to the children of smokers. 
C) increase life insurance premiums of smokers. 
D) accidental fires in the homes of smokers. B

Question 4

Suppose the United States chose to legalize the production and use of marijuana and after doing so found that the price fell. This would

Accepted Answer

A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the supply-side effect. 
D) suggest that the supply curve is vertical. 
A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the supply-side effect. 
D) suggest that the supply curve is vertical.

Question 5

The fraction of all adults under the age of 35 who have violated the law when it comes to their consumption of an illegal good or service is

Accepted Answer

A) one tenth. 
B) one fifth. 
C) one half. 
D) two thirds. 
A) one tenth. 
B) one fifth. 
C) one half. 
D) two thirds.

Question 6

In 2015 the fraction of the American population that smokes is

Accepted Answer

A) 5% 
B) 17% 
C) 25% 
D) 43% 
A) 5% 
B) 17% 
C) 25% 
D) 43%

Question 7

An alternative to prohibiting sale of a tobacco is imposing a tax equal to its marginal

Accepted Answer

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

Question 8

Suppose the United States chose to legalize the production and use of marijuana and after doing so found that the price rose. This would

Accepted Answer

A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the supply-side effect. 
D) suggest that the supply curve is vertical. 
A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the supply-side effect. 
D) suggest that the supply curve is vertical.

Question 9

Recent estimates of the elasticity of demand for cigarettes by adults

Accepted Answer

A) shows that it has increased markedly in part because of the existence of e-cigarettes. 
B) shows that it has increased by only a small (and insignificant)amount. 
C) shows that it has remained remarkably constant despite the existence of e-cigarettes. 
D) shows that it has declined markedly in part because of the existence of e-cigarettes. 
A) shows that it has increased markedly in part because of the existence of e-cigarettes. 
B) shows that it has increased by only a small (and insignificant)amount. 
C) shows that it has remained remarkably constant despite the existence of e-cigarettes. 
D) shows that it has declined markedly in part because of the existence of e-cigarettes.

Question 10

For a previously illegal good, decriminalization will cause

Accepted Answer

A) demand to increase. 
B) demand to become less elastic. 
C) supply to become less elastic. 
D) price to fall, unambiguously. 
A) demand to increase. 
B) demand to become less elastic. 
C) supply to become less elastic. 
D) price to fall, unambiguously.

Question 11

For a previously illegal good, decriminalization will cause

Accepted Answer

A) demand to increase. 
B) demand to become less elastic. 
C) supply to become less elastic. 
D) price to rise, unambiguously. 
A) demand to increase. 
B) demand to become less elastic. 
C) supply to become less elastic. 
D) price to rise, unambiguously.

Question 12

-In Figure 22.2, which area represents total revenue to the tobacco company?

Accepted Answer

A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ*

Question 13

External costs are modeled by creating a new social cost curve that is

Accepted Answer

A) lower than the original supply curve. 
B) higher than the original supply curve. 
C) lower than the original demand curve. 
D) higher than the original demand curve. 
A) lower than the original supply curve. 
B) higher than the original supply curve. 
C) lower than the original demand curve. 
D) higher than the original demand curve.

Question 14

Among the very real problems of tobacco, alcohol and illegal goods and services are

Accepted Answer

A) added tax receipts. 
B) external costs. 
C) external benefits. 
D) salutary effects upon spouses and children. 
A) added tax receipts. 
B) external costs. 
C) external benefits. 
D) salutary effects upon spouses and children.

Question 15

Externalities are effects of a transaction that __________ people who are not part of that transaction.

Accepted Answer

A) only help 
B) only hurt 
C) either help or hurt 
D) leave unaffected 
A) only help 
B) only hurt 
C) either help or hurt 
D) leave unaffected

Question 16

After accounting for externalities with a social cost curve, the new equilibrium would be such that equilibrium price is

Accepted Answer

A) lower than before and equilibrium quantity is higher than before. 
B) higher than before and equilibrium quantity is higher than before. 
C) lower than before and equilibrium quantity is lower than before. 
D) higher than before and equilibrium quantity is lower than before. 
A) lower than before and equilibrium quantity is higher than before. 
B) higher than before and equilibrium quantity is higher than before. 
C) lower than before and equilibrium quantity is lower than before. 
D) higher than before and equilibrium quantity is lower than before.

Question 17

The fraction of prostitutes who were victims of childhood incest is estimated to be

Accepted Answer

A) 20 percent. 
B) 40 percent. 
C) 55 percent. 
D) 80 percent. 
A) 20 percent. 
B) 40 percent. 
C) 55 percent. 
D) 80 percent.

Question 18

-In Figure 22.1 and ignoring any possible externalities, the net benefit to society of this market is

Accepted Answer

A) 0ACQ* 
B) ABC 
C) BP*C 
D) 0P*CQ* 
A) 0ACQ* 
B) ABC 
C) BP*C 
D) 0P*CQ*

Question 19

-In Figure 22.1, which area represents total revenue to the drug dealer?

Accepted Answer

A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ*

Question 20

For a previously legal good, criminalization will cause

Accepted Answer

A) supply to increase. 
B) supply to become more elastic. 
C) demand to become less elastic. 
D) price to rise, unambiguously. 
A) supply to increase. 
B) supply to become more elastic. 
C) demand to become less elastic. 
D) price to rise, unambiguously.

Exam 22: The Line Between Legal and Illegal Goods

-In Figure 22.1, which area represents total variable cost to the drug dealer?

-In Figure 22.2, which area represents total value to the smoker?

An example of an external cost of tobacco is

Suppose the United States chose to legalize the production and use of marijuana and after doing so found that the price fell. This would

The fraction of all adults under the age of 35 who have violated the law when it comes to their consumption of an illegal good or service is

In 2015 the fraction of the American population that smokes is

An alternative to prohibiting sale of a tobacco is imposing a tax equal to its marginal

Suppose the United States chose to legalize the production and use of marijuana and after doing so found that the price rose. This would

Recent estimates of the elasticity of demand for cigarettes by adults

For a previously illegal good, decriminalization will cause

For a previously illegal good, decriminalization will cause

-In Figure 22.2, which area represents total revenue to the tobacco company?

External costs are modeled by creating a new social cost curve that is

Among the very real problems of tobacco, alcohol and illegal goods and services are

Externalities are effects of a transaction that __________ people who are not part of that transaction.

After accounting for externalities with a social cost curve, the new equilibrium would be such that equilibrium price is

The fraction of prostitutes who were victims of childhood incest is estimated to be

-In Figure 22.1 and ignoring any possible externalities, the net benefit to society of this market is

-In Figure 22.1, which area represents total revenue to the drug dealer?

For a previously legal good, criminalization will cause

Economics: the Study of Opportunity Cost

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Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

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International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

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So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

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Minimum Wage

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Head Start

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The Economics of Terrorism

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