Question 1

Which of the following describes a positive externality?

Accepted Answer

A) John Henry paints the outside of his house in order to increase its market value just before he puts the house up for sale. 
B) People who do not attend college still benefit from others who receive a college education. 
C) The government imposes a tax on cigarettes in order to discourage smoking among teenagers. 
D) Mary volunteers to drive her neighbor's children to soccer practice. 
A) John Henry paints the outside of his house in order to increase its market value just before he puts the house up for sale. 
B) People who do not attend college still benefit from others who receive a college education. 
C) The government imposes a tax on cigarettes in order to discourage smoking among teenagers. 
D) Mary volunteers to drive her neighbor's children to soccer practice.

Question 2

Which of the following describes how a positive externality affects a competitive market?

Accepted Answer

A) The externality causes a difference between the private benefit from consumption and the social benefit. 
B) The externality causes a difference between the private benefit from production and the social cost of production. 
C) The externality causes quantity demanded to exceed quantity supplied. 
D) The externality causes a difference between the social cost of production and the social cost of consumption. 
A) The externality causes a difference between the private benefit from consumption and the social benefit. 
B) The externality causes a difference between the private benefit from production and the social cost of production. 
C) The externality causes quantity demanded to exceed quantity supplied. 
D) The externality causes a difference between the social cost of production and the social cost of consumption.

Question 3

Classifying a good as excludable means

Accepted Answer

A) that someone can be barred from consuming the good based on race,creed or some other irrelevant characteristic. 
B) that anyone who does not pay for the good cannot consume it. 
C) that consumption of the good causes no externalities. 
D) that a producer with patent or copyright protection can exclude any other producer from selling his product. 
A) that someone can be barred from consuming the good based on race,creed or some other irrelevant characteristic. 
B) that anyone who does not pay for the good cannot consume it. 
C) that consumption of the good causes no externalities. 
D) that a producer with patent or copyright protection can exclude any other producer from selling his product.

Question 4

If the social cost of producing a good or service exceeds the private cost,

Accepted Answer

A) a positive externality exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) the market achieves economic efficiency. 
D) a negative externality exists. 
A) a positive externality exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) the market achieves economic efficiency. 
D) a negative externality exists.

Question 5

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

Accepted Answer

A) True 
 B)False

Question 6

To derive a demand curve for a public good,we

Accepted Answer

A) add the price that each consumer is willing to pay for each quantity of the public good. 
B) add the quantities that each consumer is willing to purchase at each price of the public good. 
C) multiply the quantity demanded at each price by the number of the consumers. 
D) multiply the price by the quantity for each consumer and add up across all consumers. 
A) add the price that each consumer is willing to pay for each quantity of the public good. 
B) add the quantities that each consumer is willing to purchase at each price of the public good. 
C) multiply the quantity demanded at each price by the number of the consumers. 
D) multiply the price by the quantity for each consumer and add up across all consumers.

Question 7

When products that create positive externalities are produced,at the market equilibrium output,the social benefit generated by consuming the product exceeds the private benefit.

Accepted Answer

A) True 
 B)False

Question 8

The supply curve of a public goods shows

Accepted Answer

A) the total quantities that all producers are willing and able to supply at each price. 
B) the maximum amount suppliers require to produce each quantity of the good. 
C) the total cost of producing each unit of the good. 
D) the marginal cost of producing each unit of the good. 
A) the total quantities that all producers are willing and able to supply at each price. 
B) the maximum amount suppliers require to produce each quantity of the good. 
C) the total cost of producing each unit of the good. 
D) the marginal cost of producing each unit of the good.

Question 9

State whether each of the following goods and services is nonrival,nonexcludable or both:
a.A toll road
b.A public park
c.A lighthouse
d.An art museum
e.A radio broadcast of A Prairie Home Companion

Accepted Answer

a.Nonrival,although rivalry could exist

Question 10

Public goods are distinguished by two primary characteristics.What are they?

Accepted Answer

A) nonrivalry and nonexcludability 
B) government intervention and low prices 
C) market failure and high prices 
D) rivalry and exclusivity 
A) nonrivalry and nonexcludability 
B) government intervention and low prices 
C) market failure and high prices 
D) rivalry and exclusivity

Question 11

If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost,

Accepted Answer

A) further reductions will make society better off. 
B) the marginal benefit will rise and the marginal cost will fall as further reductions are made. 
C) economic efficiency will be achieved when emissions are reduced to zero. 
D) private businesses,rather the consumers,should be made to pay for the cost of further reductions. 
A) further reductions will make society better off. 
B) the marginal benefit will rise and the marginal cost will fall as further reductions are made. 
C) economic efficiency will be achieved when emissions are reduced to zero. 
D) private businesses,rather the consumers,should be made to pay for the cost of further reductions.

Question 12

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

Accepted Answer

A pubic good is: (a)nonrivalrous - one p

Question 13

How does a positive externality in consumption reduce economic efficiency?

Accepted Answer

If there is a positive externality in co

Question 14

A good that is rival but not excludable is a

Accepted Answer

A) common resource. 
B) public good. 
C) quasi-public good. 
D) quasi-private good. 
A) common resource. 
B) public good. 
C) quasi-public good. 
D) quasi-private good.

Question 15

"Free riding" is a characteristic of which type of good?

Accepted Answer

A) a private good 
B) a common resource 
C) a public good 
D) a good that is both rival and excludable 
A) a private good 
B) a common resource 
C) a public good 
D) a good that is both rival and excludable

Question 16

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

Accepted Answer

A) True 
 B)False

Question 17

Goods that are excludable but not rival are

Accepted Answer

A) public goods. 
B) semi-private goods. 
C) common resources. 
D) quasi-public goods. 
A) public goods. 
B) semi-private goods. 
C) common resources. 
D) quasi-public goods.

Question 18

Compare two situations.(A)A firm is not legally responsible for damages that result from air pollution caused by its production of steel.(B)A firm is legally responsible for damages that result from its production of steel.Ronald Coase argued that

Accepted Answer

A) bargaining between the firm and the victims of the air pollution caused by the firm will result in little reduction of pollution in either situation (
A) or (
B) because the firm has greater economic and political power than the victims. 
B) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a greater reduction in pollution in situation (
A) than situation (
B) . 
C) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a smaller reduction in pollution in situation (
A) than situation (
B) . 
D) bargaining between the firm and the victims of the air pollution caused by the firm would lead to an equal reduction in pollution in situation (
A) and situation (
B) . 
A) bargaining between the firm and the victims of the air pollution caused by the firm will result in little reduction of pollution in either situation (
A) or (
B) because the firm has greater economic and political power than the victims. 
B) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a greater reduction in pollution in situation (
A) than situation (
B) . 
C) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a smaller reduction in pollution in situation (
A) than situation (
B) . 
D) bargaining between the firm and the victims of the air pollution caused by the firm would lead to an equal reduction in pollution in situation (
A) and situation (
B) .

Question 19

If electric utilities continually reduce their emissions of sulfur dioxide,

Accepted Answer

A) the utilities will eventually be forced to go out of business. 
B) the marginal benefit of additional emissions will rise. 
C) the marginal cost of further emissions will rise. 
D) the total benefit of sulfur dioxide emissions will fall. 
A) the utilities will eventually be forced to go out of business. 
B) the marginal benefit of additional emissions will rise. 
C) the marginal cost of further emissions will rise. 
D) the total benefit of sulfur dioxide emissions will fall.

Question 20

Goods can be classified on the basis of whether their consumption is

Accepted Answer

A) internal and excludable. 
B) rival and competitive. 
C) includable and cooperative. 
D) rival and excludable. 
A) internal and excludable. 
B) rival and competitive. 
C) includable and cooperative. 
D) rival and excludable.

Which of the following describes a positive externality?

Which of the following describes how a positive externality affects a competitive market?

Classifying a good as excludable means

If the social cost of producing a good or service exceeds the private cost,

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

To derive a demand curve for a public good,we

When products that create positive externalities are produced,at the market equilibrium output,the social benefit generated by consuming the product exceeds the private benefit.

The supply curve of a public goods shows

State whether each of the following goods and services is nonrival,nonexcludable or both: a.A toll road b.A public park c.A lighthouse d.An art museum e.A radio broadcast of A Prairie Home Companion

Public goods are distinguished by two primary characteristics.What are they?

If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost,

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

How does a positive externality in consumption reduce economic efficiency?

A good that is rival but not excludable is a

"Free riding" is a characteristic of which type of good?

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

Goods that are excludable but not rival are

Compare two situations.(A)A firm is not legally responsible for damages that result from air pollution caused by its production of steel.(B)A firm is legally responsible for damages that result from its production of steel.Ronald Coase argued that

If electric utilities continually reduce their emissions of sulfur dioxide,

Goods can be classified on the basis of whether their consumption is

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 5: Externalities, environmental Policy, and Public Goods

Which of the following describes a positive externality?

Which of the following describes how a positive externality affects a competitive market?

Classifying a good as excludable means

If the social cost of producing a good or service exceeds the private cost,

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

To derive a demand curve for a public good,we

When products that create positive externalities are produced,at the market equilibrium output,the social benefit generated by consuming the product exceeds the private benefit.

The supply curve of a public goods shows

State whether each of the following goods and services is nonrival,nonexcludable or both: a.A toll road b.A public park c.A lighthouse d.An art museum e.A radio broadcast of A Prairie Home Companion

Public goods are distinguished by two primary characteristics.What are they?

If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost,

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

How does a positive externality in consumption reduce economic efficiency?

A good that is rival but not excludable is a

"Free riding" is a characteristic of which type of good?

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

Goods that are excludable but not rival are

Compare two situations.(A)A firm is not legally responsible for damages that result from air pollution caused by its production of steel.(B)A firm is legally responsible for damages that result from its production of steel.Ronald Coase argued that

If electric utilities continually reduce their emissions of sulfur dioxide,

Goods can be classified on the basis of whether their consumption is

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters