Question 1

Which of the following is an example of a public good?

Accepted Answer

A) A prescription drug. 
B) Postsecondary education. 
C) A lighthouse. 
D) An orange orchard alongside a honey farm. 
A) A prescription drug. 
B) Postsecondary education. 
C) A lighthouse. 
D) An orange orchard alongside a honey farm.

Question 2

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
 09-18 Providing Subsidies
The following graph refers to a province's day care market which is in equilibrium:
  
-Refer to the above graph to answer this question.In an effort to increase the number of daycare spaces,suppose the authorities give daycare operators a subsidy of $150 for each child registered.What will be the new equilibrium quantity?

Accepted Answer

A) 5,000. 
B) 6,000. 
C) 7,000. 
D) 8,000. 
E) 9,000. 
A) 5,000. 
B) 6,000. 
C) 7,000. 
D) 8,000. 
E) 9,000.

Question 3

Differentiate between productive efficiency and allocative efficiency.

Accepted Answer

Productive efficiency is the production

Question 4

Which of the following statements is correct regarding the term marginal social cost?

Accepted Answer

A) It includes only the private costs of production. 
B) It includes only the external costs of production. 
C) It includes both the private and the external costs of production. 
D) It is the difference between external costs and private costs of production. 
A) It includes only the private costs of production. 
B) It includes only the external costs of production. 
C) It includes both the private and the external costs of production. 
D) It is the difference between external costs and private costs of production.

Question 5

-Refer to the graph above to answer this question.If a per unit tax equal to the external costs was imposed on the sellers of this product,what would be the equilibrium price?

Accepted Answer

A) 0a. 
B) 0b. 
C) 0c. 
D) 0d. 
A) 0a. 
B) 0b. 
C) 0c. 
D) 0d.

Question 6

Differentiate between a quasi-public good and a public good?

Accepted Answer

A quasi-public good is a private good th

Question 7

Long-run equilibrium in competitive markets implies that P = MC = AC.

Accepted Answer

A) True 
 B)False

Question 8

Identify each of the following as an external cost or external benefit.
a.Second-hand smoke.
b.Noise pollution.
c.Higher college graduation rate.
d.Climate change.

Accepted Answer

· External cost.
· E

Question 9

The following table shows the marginal private cost (MPC)and the marginal social cost (MSC)of a chemical factory.
   Answer the following questions:
(1)What is the marginal cost of the factory's externality? Is it constant at all quantities?
(2)If the factory is a perfectly competitive firm and is not required by the government to internalize its external cost,how many tons should the factory produce,given that the market price of a ton of chemicals is $130?
(3)If the factory is a perfectly competitive firm and is required by the government to internalize its external cost,how many tons should the factory produce,given that the market price of a ton of chemicals is $130?
(4)Draw a graph illustrating your answers.

Accepted Answer

(1)The marginal cost of the factory's ex

Question 10

By non-excludability,economists mean the inability of some firms to prevent certain people from buying a product.

Accepted Answer

A) True 
 B)False

Question 11

-Refer to Figure 9.10 to answer this question.Compared with the ideal quantity,which of the following statements is correct regarding an unregulated competitive market?

Accepted Answer

A) It would be overproducing at quantity Q1. 
B) It would be under producing at quantity Q2. 
C) It would be overproducing at quantity Q2. 
D) It would be overproducing at quantity Q3. 
E) It would be under producing at quantity Q4. 
A) It would be overproducing at quantity Q1. 
B) It would be under producing at quantity Q2. 
C) It would be overproducing at quantity Q2. 
D) It would be overproducing at quantity Q3. 
E) It would be under producing at quantity Q4.

Question 12

What is implied if an economy achieves allocative efficiency?

Accepted Answer

A) Products are being produced at their lowest cost. 
B) Everyone is able to obtain everything he or she desires. 
C) The cost of an additional item would be less than its price. 
D) The income of the society is being equitably distributed. 
E) The best combination of goods is being produced. 
A) Products are being produced at their lowest cost. 
B) Everyone is able to obtain everything he or she desires. 
C) The cost of an additional item would be less than its price. 
D) The income of the society is being equitably distributed. 
E) The best combination of goods is being produced.

Question 13

Economic surplus is

Accepted Answer

A) the ratio of consumer surplus to producer surplus. 
B) the difference between consumer surplus and producer surplus. 
C) the difference between tax revenue and government expenditure. 
D) the sum of consumer surplus and producer surplus. 
E) minimized at the point of market equilibrium. 
A) the ratio of consumer surplus to producer surplus. 
B) the difference between consumer surplus and producer surplus. 
C) the difference between tax revenue and government expenditure. 
D) the sum of consumer surplus and producer surplus. 
E) minimized at the point of market equilibrium.

Question 14

Big Construction Company wants to create a new housing development near Big City.Animal rights activists are adamantly opposed to the housing development since the proposed site would destroy the natural habitat of a rare spotted duck family.How would an economist analyze this situation? Illustrate your answer with a supply and demand diagram.What would be the most difficult part of implementing your plan?

Accepted Answer

An economist would point out that an ext

Question 15

Figure 9.9 shows the demand and supply of a product in a competitive market.
  
-Refer to Figure 9.9 to answer the question.Suppose that this graph represents an industry with big external benefits and that the government wishes to increase its output by 10 units and raise its price.Which of the following will produce this result?

Accepted Answer

A) Imposing an excise tax of $2. 
B) Imposing an excise tax of $1. 
C) Granting a subsidy of $2 to producers. 
D) Granting a subsidy of $1 to producers. 
E) Granting a subsidy of $2 to consumers. 
A) Imposing an excise tax of $2. 
B) Imposing an excise tax of $1. 
C) Granting a subsidy of $2 to producers. 
D) Granting a subsidy of $1 to producers. 
E) Granting a subsidy of $2 to consumers.

Question 16

What are the two ways in which a public good is distinguished from a private good? Briefly explain each.

Accepted Answer

The two ways in which a public good is d

Question 17

The following are cost data for four different size plants available to a competitive producer:
  
-Refer to the above information to answer this question.What will be the price of the product in the long run?

Accepted Answer

A) $55. 
B) $70. 
C) $65. 
D) $75. 
E) Cannot be determined. 
A) $55. 
B) $70. 
C) $65. 
D) $75. 
E) Cannot be determined.

Question 18

What is the term for production of a product at the lowest possible average cost?

Accepted Answer

A) Allocative efficiency. 
B) Productive efficiency. 
C) Marginal efficiency. 
D) Optimal efficiency. 
A) Allocative efficiency. 
B) Productive efficiency. 
C) Marginal efficiency. 
D) Optimal efficiency.

Question 19

What is meant by the term productive efficiency? If an economy is productively efficient,what conditions must be true?

Accepted Answer

Product efficiency means that the produc

Question 20

-Refer to Figure 9.10 to answer this question.Which of the following statements is correct regarding an unregulated competitive market?

Accepted Answer

A) Its price of P1 would be lower than a price that included all externalities. 
B) Its price of P1 would be higher than a price that included all externalities. 
C) Its price of P2 would be higher than a price that included all externalities. 
D) Its price of P3 would be lower than a price that included all externalities. 
E) Its price of P4 would be lower than a price that included all externalities. 
A) Its price of P1 would be lower than a price that included all externalities. 
B) Its price of P1 would be higher than a price that included all externalities. 
C) Its price of P2 would be higher than a price that included all externalities. 
D) Its price of P3 would be lower than a price that included all externalities. 
E) Its price of P4 would be lower than a price that included all externalities.

Which of the following is an example of a public good?

Differentiate between productive efficiency and allocative efficiency.

Which of the following statements is correct regarding the term marginal social cost?

-Refer to the graph above to answer this question.If a per unit tax equal to the external costs was imposed on the sellers of this product,what would be the equilibrium price?

Differentiate between a quasi-public good and a public good?

Long-run equilibrium in competitive markets implies that P = MC = AC.

Identify each of the following as an external cost or external benefit. a.Second-hand smoke. b.Noise pollution. c.Higher college graduation rate. d.Climate change.

By non-excludability,economists mean the inability of some firms to prevent certain people from buying a product.

-Refer to Figure 9.10 to answer this question.Compared with the ideal quantity,which of the following statements is correct regarding an unregulated competitive market?

What is implied if an economy achieves allocative efficiency?

Economic surplus is

What are the two ways in which a public good is distinguished from a private good? Briefly explain each.

The following are cost data for four different size plants available to a competitive producer: -Refer to the above information to answer this question.What will be the price of the product in the long run?

What is the term for production of a product at the lowest possible average cost?

What is meant by the term productive efficiency? If an economy is productively efficient,what conditions must be true?

-Refer to Figure 9.10 to answer this question.Which of the following statements is correct regarding an unregulated competitive market?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 9: An Evaluation of Competitive Markets

Which of the following is an example of a public good?

Differentiate between productive efficiency and allocative efficiency.

Which of the following statements is correct regarding the term marginal social cost?

-Refer to the graph above to answer this question.If a per unit tax equal to the external costs was imposed on the sellers of this product,what would be the equilibrium price?

Differentiate between a quasi-public good and a public good?

Long-run equilibrium in competitive markets implies that P = MC = AC.

Identify each of the following as an external cost or external benefit. a.Second-hand smoke. b.Noise pollution. c.Higher college graduation rate. d.Climate change.

By non-excludability,economists mean the inability of some firms to prevent certain people from buying a product.

-Refer to Figure 9.10 to answer this question.Compared with the ideal quantity,which of the following statements is correct regarding an unregulated competitive market?

What is implied if an economy achieves allocative efficiency?

Economic surplus is

What are the two ways in which a public good is distinguished from a private good? Briefly explain each.

The following are cost data for four different size plants available to a competitive producer: -Refer to the above information to answer this question.What will be the price of the product in the long run?

What is the term for production of a product at the lowest possible average cost?

What is meant by the term productive efficiency? If an economy is productively efficient,what conditions must be true?

-Refer to Figure 9.10 to answer this question.Which of the following statements is correct regarding an unregulated competitive market?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters