Question 1

Adverse selection occurs in the market for used cars because used car buyers

Accepted Answer

A)  have more information than used car sellers. 
B)  have less information than used car sellers. 
C)  have less incentive to maintain the value of their cars than new car buyers. 
D)  tend to have more accidents than new car buyers. 
A)  have more information than used car sellers. 
B)  have less information than used car sellers. 
C)  have less incentive to maintain the value of their cars than new car buyers. 
D)  tend to have more accidents than new car buyers.

Question 2

If marginal benefit is greater than marginal cost,output is inefficiently high.

Accepted Answer

A) True 
 B)False

Question 3

Figure 11.10   Consider a chemical plant that discharges toxic waste into a nearby waterway. To reduce the emissions of toxic waste, the firm can install pollution abatement devices. Figure 11.10 shows the marginal benefit and the marginal cost from reduction the toxic waste emissions.
-Refer to Figure 11.10.Suppose the emissions reduction target is currently established at 8 million tons.What is the area that represents the cost of eliminating an additional 1 million tons?

Accepted Answer

A)  A 
B)  B + C 
C)  A + B 
D)  A + B + C 
A)  A 
B)  B + C 
C)  A + B 
D)  A + B + C

Question 4

How does a positive externality in consumption reduce economic efficiency?
--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------

Accepted Answer

If there is a positive externality in co

Question 5

Moral hazard refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Accepted Answer

A) True 
 B)False

Adverse selection occurs in the market for used cars because used car buyers

If marginal benefit is greater than marginal cost,output is inefficiently high.

Moral hazard refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 11: Government Intervention in the Market

Adverse selection occurs in the market for used cars because used car buyers

If marginal benefit is greater than marginal cost,output is inefficiently high.

Moral hazard refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters