Question 1

An uncongested,toll road is characterized by:

Accepted Answer

A) nonexclusion and nonrivalry in consumption. 
B) nonexclusion but rivalry in consumption. 
C) exclusion and nonrivalry in consumption. 
D) exclusion but rivalry in consumption. 
A) nonexclusion and nonrivalry in consumption. 
B) nonexclusion but rivalry in consumption. 
C) exclusion and nonrivalry in consumption. 
D) exclusion but rivalry in consumption. C

Question 2

In the figure given below,DS1U1B11S1U1B0 and SS1U1B11S1U1B0 are the private demand and supply curves,of a commodity produced by a competitive firm.SS1U1B12S1U1B0 reflects the social marginal cost of production,while SS1U1B10S1U1B0 represents the external marginal cost.  
-Refer to Figure 20-1.A comparison between the efficient outcome and the market equilibrium reveals that:

Accepted Answer

A) the price level when the outcome is efficient is higher than the price at the market equilibrium by $30. 
B) the price level when the outcome is efficient is lower than the price at the market equilibrium by $10. 
C) the price level when the outcome is efficient is lower than the price at the market equilibrium by $40. 
D) the price level when the outcome is efficient is higher than the price at the market equilibrium by $20. 
A) the price level when the outcome is efficient is higher than the price at the market equilibrium by $30. 
B) the price level when the outcome is efficient is lower than the price at the market equilibrium by $10. 
C) the price level when the outcome is efficient is lower than the price at the market equilibrium by $40. 
D) the price level when the outcome is efficient is higher than the price at the market equilibrium by $20. D

Question 3

In the figure given below,the competitive supply curve of a commodity is given by SS1U1B11S1U1B0,the private marginal benefit curve is DS1U1B11S1U1B0,the marginal social benefit curve is DS1U1B12S1U1B0,and the MBS1U1B1ES1U1B0 curve reflects the marginal external benefits.  
-In Figure 20-2,if the efficient output is being produced,the market price of the commodity must be:

Accepted Answer

A) $12. 
B) $17. 
C) $20. 
D) $24. 
A) $12. 
B) $17. 
C) $20. 
D) $24. C

Question 4

A Web site which allows users to share music at no cost is an example of a(n):

Accepted Answer

A) good characterized by rivalry and exclusion. 
B) inferior good. 
C) luxury good. 
D) good that is nonrival in consumption. 
A) good characterized by rivalry and exclusion. 
B) inferior good. 
C) luxury good. 
D) good that is nonrival in consumption.

Question 5

In the figure given below,DS1U1B11S1U1B0 and SS1U1B11S1U1B0 are the private demand and supply curves,of a commodity produced by a competitive firm.SS1U1B12S1U1B0 reflects the social marginal cost of production,while SS1U1B10S1U1B0 represents the external marginal cost.  
-In Figure 20-1,if the government levies a tax of $8 per unit of output,then:

Accepted Answer

A) the marginal social benefit will exceed the marginal social cost and the good will be underproduced. 
B) marginal social benefit will not exceed the marginal social cost and the good will not be overproduced. 
C) marginal social benefit will exceed the marginal social cost and the good will be overproduced. 
D) marginal social cost will exceed the marginal social benefit and the good will be overproduced. 
A) the marginal social benefit will exceed the marginal social cost and the good will be underproduced. 
B) marginal social benefit will not exceed the marginal social cost and the good will not be overproduced. 
C) marginal social benefit will exceed the marginal social cost and the good will be overproduced. 
D) marginal social cost will exceed the marginal social benefit and the good will be overproduced.

Question 6

What would happen if the government tries to internalize an externality,generated from the production of a commodity,through taxation?

Accepted Answer

A) The commodity will be overproduced 
B) The commodity will definitely be underproduced 
C) The market level of output will coincide with the efficient level 
D) The price of the commodity will decline 
A) The commodity will be overproduced 
B) The commodity will definitely be underproduced 
C) The market level of output will coincide with the efficient level 
D) The price of the commodity will decline

Question 7

In the figure given below,the competitive supply curve of a commodity is given by SS1U1B11S1U1B0,the private marginal benefit curve is DS1U1B11S1U1B0,the marginal social benefit curve is DS1U1B12S1U1B0,and the MBS1U1B1ES1U1B0 curve reflects the marginal external benefits.  
-In Figure 20-2,if the current level of output is 700 units,then the marginal social benefit is:

Accepted Answer

A) more than the marginal social cost and the output is more than the socially optimum level. 
B) more than the marginal social cost and the output is less than the socially optimum level. 
C) less than the marginal social cost and the output is more than the socially optimum level. 
D) equal to the marginal social cost and the output is equal to the socially optimum level. 
A) more than the marginal social cost and the output is more than the socially optimum level. 
B) more than the marginal social cost and the output is less than the socially optimum level. 
C) less than the marginal social cost and the output is more than the socially optimum level. 
D) equal to the marginal social cost and the output is equal to the socially optimum level.

Question 8

Tradable pollution permits achieve a given emission target efficiently because:

Accepted Answer

A) firms can bargain over the price of the permits. 
B) permits will be purchased by the firms that incur the least abatement cost. 
C) permits will be purchased by the firms that incur high abatement costs. 
D) the polluting firms will eventually go out of business. 
A) firms can bargain over the price of the permits. 
B) permits will be purchased by the firms that incur the least abatement cost. 
C) permits will be purchased by the firms that incur high abatement costs. 
D) the polluting firms will eventually go out of business.

Question 9

The free-rider problem occurs because:

Accepted Answer

A) it is easy to exclude others from consuming the good. 
B) consumption is rival in nature,and the consumption of a product by one individual diminishes that available for others. 
C) exclusion is costly or impossible,so that a consumer or producer can use the good without having to pay for it. 
D) the consumption of a good imposes costs on others who not directly involved in the transaction. 
A) it is easy to exclude others from consuming the good. 
B) consumption is rival in nature,and the consumption of a product by one individual diminishes that available for others. 
C) exclusion is costly or impossible,so that a consumer or producer can use the good without having to pay for it. 
D) the consumption of a good imposes costs on others who not directly involved in the transaction.

Question 10

A socially efficient quantity of a good is said to be produced,if at that output level:

Accepted Answer

A) the marginal external cost equals the marginal social benefit. 
B) the private marginal cost equals the marginal social benefit. 
C) the marginal private costs are equal to external costs. 
D) the difference between the private marginal cost and social marginal benefit is maximized. 
A) the marginal external cost equals the marginal social benefit. 
B) the private marginal cost equals the marginal social benefit. 
C) the marginal private costs are equal to external costs. 
D) the difference between the private marginal cost and social marginal benefit is maximized.

Question 11

When the entire costs and benefits of a transaction are borne by the participants of that transaction:

Accepted Answer

A) the market outcome will be inefficient. 
B) then private costs and social costs are identical. 
C) an external cost is imposed on the society. 
D) an external benefit is generated in the society. 
A) the market outcome will be inefficient. 
B) then private costs and social costs are identical. 
C) an external cost is imposed on the society. 
D) an external benefit is generated in the society.

Question 12

If there is an external cost associated with the production or consumption of a good in a competitive industry,then:

Accepted Answer

A) the output of the good produced will be too small compared to its demand in the market. 
B) in equilibrium,the social marginal cost of production will be greater than the private marginal benefit to the consumers. 
C) private benefits derived from the consumption of the good will exceed the private cost of producing the good. 
D) the efficient level of output is given by the point where the private marginal cost curve intersects the private marginal benefit curve. 
A) the output of the good produced will be too small compared to its demand in the market. 
B) in equilibrium,the social marginal cost of production will be greater than the private marginal benefit to the consumers. 
C) private benefits derived from the consumption of the good will exceed the private cost of producing the good. 
D) the efficient level of output is given by the point where the private marginal cost curve intersects the private marginal benefit curve.

Question 13

(
A)Explain how the free rider problem might apply to the research and development of new technologies,medicine,and processes if research and development were only financed by private funds.

Accepted Answer

If research and development of new techn

Question 14

Which of the following will hold true when property rights are not well defined or are not appropriately assigned?

Accepted Answer

A) Goods that generate external costs will be overproduced. 
B) Goods that generate external costs will be underproduced. 
C) Goods that generate external benefits will be overproduced. 
D) Goods that generate external benefits will be produced only by the government. 
A) Goods that generate external costs will be overproduced. 
B) Goods that generate external costs will be underproduced. 
C) Goods that generate external benefits will be overproduced. 
D) Goods that generate external benefits will be produced only by the government.

Question 15

Which of the following pollution abatement policies of the government is based on the Coasean approach?
A)Subsidizing less pollution generating firms
B)Tradable permits
C)Command and control
D)Pollution tax

Accepted Answer

B
Section Reference:

Question 16

A _____ gives the inventor the right to make a new product or use a new process typically for 17 years.

Accepted Answer

A) service mark 
B) brand name 
C) patent 
D) trade mark 
A) service mark 
B) brand name 
C) patent 
D) trade mark

Question 17

A congested,toll road is characterized by:

Accepted Answer

A) nonexclusion and nonrivalry in consumption. 
B) nonexclusion and rivalry in consumption 
C) exclusion and nonrivalry in consumption. 
D) exclusion and rivalry in consumption. 
A) nonexclusion and nonrivalry in consumption. 
B) nonexclusion and rivalry in consumption 
C) exclusion and nonrivalry in consumption. 
D) exclusion and rivalry in consumption.

Question 18

Which of the following is true of the Coase theorem?

Accepted Answer

A) The market generally ensures an efficient allocation of resources. 
B) The assignment of property rights determines the allocation of resources. 
C) Bargaining between parties can lead to an efficient allocation of resources if property rights are well defined. 
D) Private benefits exceed social benefits when property rights are ensured. 
A) The market generally ensures an efficient allocation of resources. 
B) The assignment of property rights determines the allocation of resources. 
C) Bargaining between parties can lead to an efficient allocation of resources if property rights are well defined. 
D) Private benefits exceed social benefits when property rights are ensured.

Question 19

Which of the following is true of externalities?

Accepted Answer

A) Positive externalities arise when an economic activity imposes costs on others who are not directly involved in the activity. 
B) Negative externalities can be internalized by offering subsidies to the agents who generate such externalities. 
C) Like public goods,externalities always result in a free rider problem. 
D) Externalities may arise from either production or consumption of a good or service. 
A) Positive externalities arise when an economic activity imposes costs on others who are not directly involved in the activity. 
B) Negative externalities can be internalized by offering subsidies to the agents who generate such externalities. 
C) Like public goods,externalities always result in a free rider problem. 
D) Externalities may arise from either production or consumption of a good or service.

Question 20

In the figure given below,DS1U1B11S1U1B0 and SS1U1B11S1U1B0 are the private demand and supply curves,of a commodity produced by a competitive firm.SS1U1B12S1U1B0 reflects the social marginal cost of production,while SS1U1B10S1U1B0 represents the external marginal cost.  
-Refer to Figure 20-1.If the government levies a tax of $28 per unit of output,then:

Accepted Answer

A) the marginal social benefit will exceed the marginal social cost and the good will be underproduced. 
B) marginal social cost will exceed the marginal social benefit and the good will be underproduced. 
C) marginal social benefit will exceed the marginal social cost and the good will be overproduced. 
D) marginal social cost will exceed the marginal social benefit and the good will be overproduced. 
A) the marginal social benefit will exceed the marginal social cost and the good will be underproduced. 
B) marginal social cost will exceed the marginal social benefit and the good will be underproduced. 
C) marginal social benefit will exceed the marginal social cost and the good will be overproduced. 
D) marginal social cost will exceed the marginal social benefit and the good will be overproduced.

An uncongested,toll road is characterized by:

A Web site which allows users to share music at no cost is an example of a(n):

What would happen if the government tries to internalize an externality,generated from the production of a commodity,through taxation?

Tradable pollution permits achieve a given emission target efficiently because:

The free-rider problem occurs because:

A socially efficient quantity of a good is said to be produced,if at that output level:

When the entire costs and benefits of a transaction are borne by the participants of that transaction:

If there is an external cost associated with the production or consumption of a good in a competitive industry,then:

( A)Explain how the free rider problem might apply to the research and development of new technologies,medicine,and processes if research and development were only financed by private funds.

Which of the following will hold true when property rights are not well defined or are not appropriately assigned?

Which of the following pollution abatement policies of the government is based on the Coasean approach? A)Subsidizing less pollution generating firms B)Tradable permits C)Command and control D)Pollution tax

A _____ gives the inventor the right to make a new product or use a new process typically for 17 years.

A congested,toll road is characterized by:

Which of the following is true of the Coase theorem?

Which of the following is true of externalities?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Filters

Exam 20: Public Goods and Externalities

An uncongested,toll road is characterized by:

A Web site which allows users to share music at no cost is an example of a(n):

In the figure given below,D1 and S1 are the private demand and supply curves,of a commodity produced by a competitive firm.S2 reflects the social marginal cost of production,while S0 represents the external marginal cost. -In Figure 20-1,if the government levies a tax of $8 per unit of output,then:

What would happen if the government tries to internalize an externality,generated from the production of a commodity,through taxation?

Tradable pollution permits achieve a given emission target efficiently because:

The free-rider problem occurs because:

A socially efficient quantity of a good is said to be produced,if at that output level:

When the entire costs and benefits of a transaction are borne by the participants of that transaction:

If there is an external cost associated with the production or consumption of a good in a competitive industry,then:

( A)Explain how the free rider problem might apply to the research and development of new technologies,medicine,and processes if research and development were only financed by private funds.

Which of the following will hold true when property rights are not well defined or are not appropriately assigned?

Which of the following pollution abatement policies of the government is based on the Coasean approach? A)Subsidizing less pollution generating firms B)Tradable permits C)Command and control D)Pollution tax

A _____ gives the inventor the right to make a new product or use a new process typically for 17 years.

A congested,toll road is characterized by:

Which of the following is true of the Coase theorem?

Which of the following is true of externalities?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Filters