Exam 13: Markets and Government

The figure given below shows the demand and supply curves of automobiles.Figure 13.3 In the figure, D: Demand curve of automobiles S: Supply of automobiles prior to the tax S+t: Supply of automobiles after the tax -The European Union Emission Trading Scheme is an example of:

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -The owner of a good has the right to decide how that good is used and to restrict others from using that good. This idea is known as:

-Under a marketable pollution permit system, property rights to an externality are created so that a more efficient allocation of resources will result.

-A market in which adverse selection occurs is often called a lemons market.

The figure given below shows the demand and supply curves of automobiles.Figure 13.3 In the figure, D: Demand curve of automobiles S: Supply of automobiles prior to the tax S+t: Supply of automobiles after the tax -Suppose that the current price of a marketable permit to emit one ton of gunk is $60. For firm A, the marginal cost of reducing one ton of gunk is $50. For firm B, the marginal cost of reducing one ton of gunk is $70. Under a marketable permit system, _____.

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -Which of the following statements is true?

The figure given below shows the demand and supply curves of automobiles.Figure 13.3 In the figure, D: Demand curve of automobiles S: Supply of automobiles prior to the tax S+t: Supply of automobiles after the tax -According to Figure 13.3, the market attains equilibrium before the tax is imposed at:

The figure given below shows the demand and supply curves of automobiles.Figure 13.3 In the figure, D: Demand curve of automobiles S: Supply of automobiles prior to the tax S+t: Supply of automobiles after the tax -Suppose the current price of a marketable permit to emit one ton of sulfur dioxide is $100. If the marginal cost for a firm to reduce one ton of sulfur dioxide is $80, then:

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -The social cost of a transaction is _____.

-When a good commodity is driven out of the market by a bad commodity, the result is called:

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -When the social costs of producing or consuming a good exceed the private costs, _____.

-When negative externalities exist in a market, that market will produce too little output compared to the socially efficient level of output.

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -​Which of the following activities will generate a negative externality?

-If the price of marketable permits is kept very high, _____.​

-In the case of automobile and medical insurance, adverse selection might mean that as the cost of insurance rises, the good drivers and healthy people reduce their coverage, while the poor drivers and unhealthy people maintain their coverage.

-The existence of network externalities implies that:

-When resources are commonly owned, there are incentives in place to ensure that the resources are used efficiently.

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2 -When a private transaction imposes costs on others not directly involved in the transaction, _____.

-The cost borne by an individual user to switch to another network is small if the network which he is using is large.

-After John discovered he had a serious illness, he immediately purchased health insurance without disclosing his illness to the insurance company. This is an example of adverse selection.