Question 1

A public good is one for which the cost of exclusion is prohibitive and for which the marginal cost of provision to another consumer is zero.

Accepted Answer

A) True 
 B)False

Question 2

Adam Smith, a Scottish economist, established the proposition that individuals should not pursue their own self-interest.

Accepted Answer

A) True 
 B)False

Question 3

Free riders are people or firms that consume a private good without paying for it.

Accepted Answer

A) True 
 B)False

Question 4

If the MC of an activity exceeds the MB, the activity should be increased.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer question(s): Measuring Consumer Surplus
  
-(Exhibit: Measuring Consumer Surplus) If pizzas are $6 each, your consumer surplus is:

Accepted Answer

A)  $24. 
B)  $16. 
C)  $8. 
D)  $4. 
A)  $24. 
B)  $16. 
C)  $8. 
D)  $4.

Question 6

Explain the characteristics of and the differences between public goods and private goods.Give examples of each and discuss why they are classified the way they are.

Accepted Answer

Public goods and private goods are two d

Question 7

A normal market supply curve reflects:

Accepted Answer

A)  private benefits to sellers. 
B)  private costs to sellers. 
C)  social benefits to buyers. 
D)  external benefits to sellers. 
A)  private benefits to sellers. 
B)  private costs to sellers. 
C)  social benefits to buyers. 
D)  external benefits to sellers.

Question 8

Profit is the difference between _______ and _______ .

Accepted Answer

A)  total sales; total revenues 
B)  total profits; total costs 
C)  total revenues; total costs 
D)  marginal costs; marginal revenues 
A)  total sales; total revenues 
B)  total profits; total costs 
C)  total revenues; total costs 
D)  marginal costs; marginal revenues

Question 9

If an economic activity results in external costs as well as private costs, economic theory would suggest that this activity should:

Accepted Answer

A)  be taxed. 
B)  be prohibited. 
C)  be subsidized. 
D)  not be allowed. 
A)  be taxed. 
B)  be prohibited. 
C)  be subsidized. 
D)  not be allowed.

Question 10

Use the following to answer question(s): Marginal Benefits and Marginal Costs
  
-(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores.At 4 hours of study the student will "maximize" because:

Accepted Answer

A)  MB = MC. 
B)  MB = 20 and MC = 20. 
C)  the difference between total benefits and total costs is maximized. 
D)  of all of the above. 
A)  MB = MC. 
B)  MB = 20 and MC = 20. 
C)  the difference between total benefits and total costs is maximized. 
D)  of all of the above.

Question 11

Which of the following is a public good?

Accepted Answer

A)  carrots 
B)  education at Harvard 
C)  clean air 
D)  water 
A)  carrots 
B)  education at Harvard 
C)  clean air 
D)  water

Question 12

If the MB of an activity exceeds the MC, the activity should be increased.

Accepted Answer

A) True 
 B)False

Question 13

A transferable property right is one that:

Accepted Answer

A)  can be sold or leased to someone else. 
B)  allows its owners to prevent others from using a resource. 
C)  equates marginal benefits to marginal costs. 
D)  lets anyone use a resource without cost to society. 
A)  can be sold or leased to someone else. 
B)  allows its owners to prevent others from using a resource. 
C)  equates marginal benefits to marginal costs. 
D)  lets anyone use a resource without cost to society.

Question 14

Discuss and explain market failure, public goods, private goods, noncompetitive markets, free riders, and external costs.Explain how they are interrelated.

Accepted Answer

Market failure occurs when the allocatio

Question 15

Maximization of the net benefit of an activity occurs when:

Accepted Answer

A) MB = MC. B) MB > MC. C) MB < MC. D) MB approaches MC. A) MB = MC. B) MB > MC. C) MB < MC. D) MB approaches MC.

Question 16

An industry with external costs produces:

Accepted Answer

A)  a quantity of output that is the socially ideal quantity. 
B)  a smaller quantity of output than the socially ideal quantity. 
C)  a larger quantity of output than the socially ideal quantity. 
D)  the socially ideal quantity of output if a specific subsidy is given to buyers. 
A)  a quantity of output that is the socially ideal quantity. 
B)  a smaller quantity of output than the socially ideal quantity. 
C)  a larger quantity of output than the socially ideal quantity. 
D)  the socially ideal quantity of output if a specific subsidy is given to buyers.

Question 17

The Case in Point on gift giving suggests that gifts from _____ generated the most satisfaction per dollar spent.

Accepted Answer

A)  friends 
B)  significant others 
C)  grandparents 
D)  parents 
A)  friends 
B)  significant others 
C)  grandparents 
D)  parents

Question 18

The amount by which an additional unit of an activity increases total cost is:

Accepted Answer

A)  net benefit. 
B)  marginal benefit. 
C)  negative benefit. 
D)  marginal cost. 
A)  net benefit. 
B)  marginal benefit. 
C)  negative benefit. 
D)  marginal cost.

Question 19

Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit
  
-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a), the maximum net benefit is shown:

Accepted Answer

A)  where the level of activity is at D. 
B)  by the intersection of MB and MC. 
C)  by the area of triangle ABC. 
D)  in all of the above cases. 
A)  where the level of activity is at D. 
B)  by the intersection of MB and MC. 
C)  by the area of triangle ABC. 
D)  in all of the above cases.

Question 20

Utility is the:

Accepted Answer

A)  difference between a firm's total revenue and its total economic cost. 
B)  good not adequately provided by a free market and usually provided by the government. 
C)  satisfaction consumers derive from their consumption of goods and services. 
D)  lowest price that buyers are willing to pay for a given quantity of a good. 
A)  difference between a firm's total revenue and its total economic cost. 
B)  good not adequately provided by a free market and usually provided by the government. 
C)  satisfaction consumers derive from their consumption of goods and services. 
D)  lowest price that buyers are willing to pay for a given quantity of a good.

A public good is one for which the cost of exclusion is prohibitive and for which the marginal cost of provision to another consumer is zero.

Adam Smith, a Scottish economist, established the proposition that individuals should not pursue their own self-interest.

Free riders are people or firms that consume a private good without paying for it.

If the MC of an activity exceeds the MB, the activity should be increased.

Use the following to answer question(s): Measuring Consumer Surplus -(Exhibit: Measuring Consumer Surplus) If pizzas are $6 each, your consumer surplus is:

Explain the characteristics of and the differences between public goods and private goods.Give examples of each and discuss why they are classified the way they are.

A normal market supply curve reflects:

Profit is the difference between _ and _ .

If an economic activity results in external costs as well as private costs, economic theory would suggest that this activity should:

Which of the following is a public good?

If the MB of an activity exceeds the MC, the activity should be increased.

A transferable property right is one that:

Discuss and explain market failure, public goods, private goods, noncompetitive markets, free riders, and external costs.Explain how they are interrelated.

Maximization of the net benefit of an activity occurs when:

An industry with external costs produces:

The Case in Point on gift giving suggests that gifts from _____ generated the most satisfaction per dollar spent.

The amount by which an additional unit of an activity increases total cost is:

Use the following for questions 55-59. Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit -(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a), the maximum net benefit is shown:

Utility is the:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 6: Markets, Maximizers, and Efficiency

A public good is one for which the cost of exclusion is prohibitive and for which the marginal cost of provision to another consumer is zero.

Adam Smith, a Scottish economist, established the proposition that individuals should not pursue their own self-interest.

Free riders are people or firms that consume a private good without paying for it.

If the MC of an activity exceeds the MB, the activity should be increased.

Use the following to answer question(s): Measuring Consumer Surplus -(Exhibit: Measuring Consumer Surplus) If pizzas are $6 each, your consumer surplus is:

Explain the characteristics of and the differences between public goods and private goods.Give examples of each and discuss why they are classified the way they are.

A normal market supply curve reflects:

Profit is the difference between _______ and _______ .

If an economic activity results in external costs as well as private costs, economic theory would suggest that this activity should:

Which of the following is a public good?

If the MB of an activity exceeds the MC, the activity should be increased.

A transferable property right is one that:

Discuss and explain market failure, public goods, private goods, noncompetitive markets, free riders, and external costs.Explain how they are interrelated.

Maximization of the net benefit of an activity occurs when:

An industry with external costs produces:

The Case in Point on gift giving suggests that gifts from _____ generated the most satisfaction per dollar spent.

The amount by which an additional unit of an activity increases total cost is:

Use the following for questions 55-59. Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit -(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a), the maximum net benefit is shown:

Utility is the:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Profit is the difference between _ and _ .