Question 1

Externalities are always harmful to third parties.

Accepted Answer

A) True 
 B)False

Question 2

Table 9.2  
-In Table 9.2,which firm has the lowest absolute level of costs borne directly by the producer?

Accepted Answer

A)  Firm A 
B)  Firm B 
C)  Firm C 
D)  Firm D 
A)  Firm A 
B)  Firm B 
C)  Firm C 
D)  Firm D

Question 3

If a system of emission charges forces firms to internalize all external costs:

Accepted Answer

A)  Relative prices of polluting activities will rise. 
B)  The elimination of externalities will fully compensate for any excessive market power. 
C)  The elimination of externalities will allow greater production of all goods and services. 
D)  Pollution will increase. 
A)  Relative prices of polluting activities will rise. 
B)  The elimination of externalities will fully compensate for any excessive market power. 
C)  The elimination of externalities will allow greater production of all goods and services. 
D)  Pollution will increase.

Question 4

Suppose a coal burning plant is emitting excessive pollution into the air.Suggest two ways the government can deal with this market failure.

Accepted Answer

The two ways that government has to deal

Question 5

Which of the following is not an example of market failure?

Accepted Answer

A)  Public goods. 
B)  Government intervention. 
C)  Market power. 
D)  Externalities. 
A)  Public goods. 
B)  Government intervention. 
C)  Market power. 
D)  Externalities.

Question 6

The market tends to overproduce public goods and under produce private goods.

Accepted Answer

A) True 
 B)False

Question 7

The federal government's role in antitrust enforcement is justified by considerations of:

Accepted Answer

A)  Equity. 
B)  Public goods and externalities. 
C)  Market power. 
D)  Macro failure. 
A)  Equity. 
B)  Public goods and externalities. 
C)  Market power. 
D)  Macro failure.

Question 8

Which of the following is not a goal of macro intervention?

Accepted Answer

A)  Price stability. 
B)  Market power. 
C)  Full employment. 
D)  Economic growth. 
A)  Price stability. 
B)  Market power. 
C)  Full employment. 
D)  Economic growth.

Question 9

Social Security benefits are not an income transfer since individuals contribute to the fund during their working years.

Accepted Answer

A) True 
 B)False

Question 10

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution  
-In Table 9.1,what is the marginal social cost (in dollars per PPM)of reducing pollution rates from 35 to 25 PPM?

Accepted Answer

A)  $1 
B)  $5 
C)  $7 
D)  $10 
A)  $1 
B)  $5 
C)  $7 
D)  $10

Question 11

Which of the following leads to market failure?

Accepted Answer

A)  Regulation. 
B)  Market power. 
C)  Antitrust laws. 
D)  Government planning. 
A)  Regulation. 
B)  Market power. 
C)  Antitrust laws. 
D)  Government planning.

Question 12

Macro instability refers to the underproduction of public goods.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following prohibits price discrimination?

Accepted Answer

A)  The Sherman Act 
B)  The Clayton Act 
C)  The Federal Trade Commission Act 
D)  The Full Employment and Balanced Growth Act 
A)  The Sherman Act 
B)  The Clayton Act 
C)  The Federal Trade Commission Act 
D)  The Full Employment and Balanced Growth Act

Question 14

Which of the following is most likely a private good?

Accepted Answer

A)  Flood control 
B)  Military protection 
C)  Food 
D)  Bridges 
A)  Flood control 
B)  Military protection 
C)  Food 
D)  Bridges

Question 15

The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it.This is an example of:

Accepted Answer

A)  The free-rider dilemma. 
B)  Government failure. 
C)  Inequity. 
D)  A natural monopoly. 
A)  The free-rider dilemma. 
B)  Government failure. 
C)  Inequity. 
D)  A natural monopoly.

Question 16

In economics,a public good:

Accepted Answer

A)  Is any good produced by the government. 
B)  Always causes government failure. 
C)  Is provided in an optimal amount by the market. 
D)  Allows free riders to benefit from the good. 
A)  Is any good produced by the government. 
B)  Always causes government failure. 
C)  Is provided in an optimal amount by the market. 
D)  Allows free riders to benefit from the good.

Question 17

An emission charge is a:

Accepted Answer

A)  Tax on the consumption of goods that are produced by pollution-causing firms. 
B)  Fee imposed on polluters based on the quantity of pollution they impose on society. 
C)  Tax levied on the third parties involved in externalities. 
D)  Fee imposed on free-riders for the use of a good or service. 
A)  Tax on the consumption of goods that are produced by pollution-causing firms. 
B)  Fee imposed on polluters based on the quantity of pollution they impose on society. 
C)  Tax levied on the third parties involved in externalities. 
D)  Fee imposed on free-riders for the use of a good or service.

Question 18

If a good generates an external cost,the market will produce:

Accepted Answer

A)  Some of the good but not enough. 
B)  Too much of the good. 
C)  An optimal amount of the good. 
D)  None of the gooD. 
A)  Some of the good but not enough. 
B)  Too much of the good. 
C)  An optimal amount of the good. 
D)  None of the gooD.

Question 19

The optimal mix of output is:

Accepted Answer

A)  the most desirable combination of output attainable with existing resources,technology and social values. 
B)  an attempt to compare the real worth rather than the market values to various goods and services. 
C)  an exercise to determine if is better to reduce government expenditures or reduce taxes. 
D)  the most desirable level of the distribution of income. 
A)  the most desirable combination of output attainable with existing resources,technology and social values. 
B)  an attempt to compare the real worth rather than the market values to various goods and services. 
C)  an exercise to determine if is better to reduce government expenditures or reduce taxes. 
D)  the most desirable level of the distribution of income.

Question 20

Figure 9.3:    
-In Figure 9.3,if the rate of output is 320 units:

Accepted Answer

A)  Social costs equal private costs. 
B)  Social costs exceed private costs. 
C)  Private costs exceed social costs. 
D)  External costs equal private costs. 
A)  Social costs equal private costs. 
B)  Social costs exceed private costs. 
C)  Private costs exceed social costs. 
D)  External costs equal private costs.

Externalities are always harmful to third parties.

Table 9.2 -In Table 9.2,which firm has the lowest absolute level of costs borne directly by the producer?

If a system of emission charges forces firms to internalize all external costs:

Suppose a coal burning plant is emitting excessive pollution into the air.Suggest two ways the government can deal with this market failure.

Which of the following is not an example of market failure?

The market tends to overproduce public goods and under produce private goods.

The federal government's role in antitrust enforcement is justified by considerations of:

Which of the following is not a goal of macro intervention?

Social Security benefits are not an income transfer since individuals contribute to the fund during their working years.

Which of the following leads to market failure?

Macro instability refers to the underproduction of public goods.

Which of the following prohibits price discrimination?

Which of the following is most likely a private good?

The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it.This is an example of:

In economics,a public good:

An emission charge is a:

If a good generates an external cost,the market will produce:

The optimal mix of output is:

Figure 9.3: -In Figure 9.3,if the rate of output is 320 units:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 9: Government Intervention

Externalities are always harmful to third parties.

Table 9.2 -In Table 9.2,which firm has the lowest absolute level of costs borne directly by the producer?

If a system of emission charges forces firms to internalize all external costs:

Suppose a coal burning plant is emitting excessive pollution into the air.Suggest two ways the government can deal with this market failure.

Which of the following is not an example of market failure?

The market tends to overproduce public goods and under produce private goods.

The federal government's role in antitrust enforcement is justified by considerations of:

Which of the following is not a goal of macro intervention?

Social Security benefits are not an income transfer since individuals contribute to the fund during their working years.

Which of the following leads to market failure?

Macro instability refers to the underproduction of public goods.

Which of the following prohibits price discrimination?

Which of the following is most likely a private good?

The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it.This is an example of:

In economics,a public good:

An emission charge is a:

If a good generates an external cost,the market will produce:

The optimal mix of output is:

Figure 9.3: -In Figure 9.3,if the rate of output is 320 units:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters