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 -In Figure 13.3, the amount of tax levied by the government is equal to:

Overfishing along the coastline of Helsking village led the government to impose a fee on the boats used for fishing. The fishermen were charged $50 on each boat they sent out for fishing. The following table shows the total pounds of fish caught per hour and the number of boats used for fishing.Table 13.2 -Refer to Table 13.2. Suppose fish sells for $1 per pound. If each fisherman decides whether or not to fish based on the average catch, how many boats per hour will go out to fish?

-A market failure occurs when the market outcome is not the socially efficient outcome.

-In the case of positive externalities, too many people consume and produce the good compared to what is desired by society.

-Why does an existing less efficient technology drive out a new, more efficient technology?

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 is true of an externality?

-James insured his car with a renowned insurance company that checked his driving skills and verified his accident records before insuring his car. After paying two premiums for this insurance, James took to drinking and driving. This action of James is likely to create:

-​Mary is a low-risk applicant for a loan at a bank, while John is a high-risk applicant. If the bank increases the interest rates it charges on loans, _____.

-_____ occurs when unobservable qualities are valued incorrectly because of a lack of information.

-Suppose that if there are n users of a network, the value of the membership is proportional to n(n − 1). If the value of a network to a single user is $1 for each other user on the network, then a network of size 100 has a value 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 -In the case of public goods, _____.

-The government should subsidize the production of goods which generate a positive externality.

-Private costs of an economic activity exceed social cost when external benefits are created.