Question 1

Public goods differ from private goods in that:

Accepted Answer

A)  they produce negative externalities. 
B)  they are not scarce. 
C)  there is no way to prevent people from consuming them even if they did not pay for the goods. 
D)  their consumption must be regulated by the government. 
A)  they produce negative externalities. 
B)  they are not scarce. 
C)  there is no way to prevent people from consuming them even if they did not pay for the goods. 
D)  their consumption must be regulated by the government.

Question 2

Which of the following is a property of a public good?

Accepted Answer

A)  A public good is free from externalities. 
B)  Many individuals benefit simultaneously. 
C)  A public good is not subject to free riders. 
D)  A public good is established by law. 
A)  A public good is free from externalities. 
B)  Many individuals benefit simultaneously. 
C)  A public good is not subject to free riders. 
D)  A public good is established by law.

Question 3

Market failure because of negative externality results in:

Accepted Answer

A)  marginal social cost equal to marginal private costs. 
B)  marginal social cost less than marginal social benefits. 
C)  marginal social cost equal to marginal social benefits. 
D)  greater outputs and lower price than socially desirable. 
A)  marginal social cost equal to marginal private costs. 
B)  marginal social cost less than marginal social benefits. 
C)  marginal social cost equal to marginal social benefits. 
D)  greater outputs and lower price than socially desirable.

Question 4

If the market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Accepted Answer

A)  market price will increase, decrease or remain the same and quantity exchanged will
Decrease. 
B)  market price will increase and market quantity exchanged will decrease. 
C)  market price will decrease and the quantity exchanged could increase, decrease or remain the same. 
D)  market price will increase and market quantity exchanged could increase, decrease or remain unchanged. 
A)  market price will increase, decrease or remain the same and quantity exchanged will
Decrease. 
B)  market price will increase and market quantity exchanged will decrease. 
C)  market price will decrease and the quantity exchanged could increase, decrease or remain the same. 
D)  market price will increase and market quantity exchanged could increase, decrease or remain unchanged.

Question 5

Which of the following is not a characteristic of a public good?

Accepted Answer

A)  It is scarce. 
B)  It is not diminished in amount as additional people consume the product. 
C)  Its benefits cannot be withheld from anyone. 
D)  It is free. 
A)  It is scarce. 
B)  It is not diminished in amount as additional people consume the product. 
C)  Its benefits cannot be withheld from anyone. 
D)  It is free.

Question 6

A public good such as free clean air is available for all users even those who do not pay for the public good.

Accepted Answer

A) True 
 B)False

Question 7

An increase in the price of plastic raises the cost of manufacturing DVRs. As a result, the market changes to a new equilibrium because of a(n):

Accepted Answer

A)  surplus of DVRs. 
B)  increase in the demand for DVRs. 
C)  leftward shift in the demand curve for DVRs. 
D)  leftward shift in the supply curve for DVRs. 
A)  surplus of DVRs. 
B)  increase in the demand for DVRs. 
C)  leftward shift in the demand curve for DVRs. 
D)  leftward shift in the supply curve for DVRs.

Question 8

An externality is:

Accepted Answer

A)  always a benefit to the recipient. 
B)  always a detriment to the recipient. 
C)  an activity that occurs in a business which is unknown to management. 
D)  an unintended benefit or cost imposed on third parties as a result of economic activity. 
A)  always a benefit to the recipient. 
B)  always a detriment to the recipient. 
C)  an activity that occurs in a business which is unknown to management. 
D)  an unintended benefit or cost imposed on third parties as a result of economic activity.

Question 9

Which of the following are not methods of dealing with externalities?

Accepted Answer

A)  Relying on voluntary compliance. 
B)  Taxing the output of industries that pollute. 
C)  Creating legal environmental standards. 
D)  Increasing public spending on cleanup/reduction. 
A)  Relying on voluntary compliance. 
B)  Taxing the output of industries that pollute. 
C)  Creating legal environmental standards. 
D)  Increasing public spending on cleanup/reduction.

Question 10

A minimum wage results in:

Accepted Answer

A)  market equilibrium. 
B)  increased demand for workers. 
C)  unemployment if it is set above the market clearing wage. 
D)  a shortage of workers. 
A)  market equilibrium. 
B)  increased demand for workers. 
C)  unemployment if it is set above the market clearing wage. 
D)  a shortage of workers.

Question 11

Which of the following is an example of a positive externality?

Accepted Answer

A)  Planting flowers in your front yard. 
B)  Talking loudly when others are trying to study economics. 
C)  Accidentally pushing someone as you try to cross the street. 
D)  Littering on the street. 
A)  Planting flowers in your front yard. 
B)  Talking loudly when others are trying to study economics. 
C)  Accidentally pushing someone as you try to cross the street. 
D)  Littering on the street.

Question 12

Which of the following is a property of a public good?

Accepted Answer

A)  People who do not pay do not get access to a public good. 
B)  Only selected people can consume benefits. 
C)  Public good is provided by the market. 
D)  Users collectively consume benefits. 
A)  People who do not pay do not get access to a public good. 
B)  Only selected people can consume benefits. 
C)  Public good is provided by the market. 
D)  Users collectively consume benefits.

Question 13

Which of the following statements is not true of a market?

Accepted Answer

A)  An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B)  An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C)  A decrease in supply, with no change in demand, will increase the equilibrium price and decrease the equilibrium quantity. 
D)  A decrease in demand, with no change in supply, will decrease the equilibrium price and quantity. 
A)  An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B)  An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C)  A decrease in supply, with no change in demand, will increase the equilibrium price and decrease the equilibrium quantity. 
D)  A decrease in demand, with no change in supply, will decrease the equilibrium price and quantity.

Question 14

Suppose the government sets a price floor of $10. It means that the government:

Accepted Answer

A)  wants to prevent market price from rising above $10. 
B)  wants to prevent market price from falling below $10. 
C)  has no intentions to intervene in the market. 
D)  wants a market to determine the market price. 
A)  wants to prevent market price from rising above $10. 
B)  wants to prevent market price from falling below $10. 
C)  has no intentions to intervene in the market. 
D)  wants a market to determine the market price.

Question 15

Narrbegin Exhibit 4.4 Demand and supply curves   
-In Exhibit 4.4, a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

Accepted Answer

A)  increase in supply and demand. 
B)  decrease in supply and demand. 
C)  increase in supply that dominates a decrease in demand. 
D)  increase in demand that dominates a decrease in supply. 
A)  increase in supply and demand. 
B)  decrease in supply and demand. 
C)  increase in supply that dominates a decrease in demand. 
D)  increase in demand that dominates a decrease in supply.

Question 16

A public good will:

Accepted Answer

A)  be efficiently provided by the free market as long as its total benefits exceed its total costs. 
B)  be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. 
C)  be provided in less than efficient quantities by the free market. 
D)  be provided in efficient quantities by voluntary contributions. 
A)  be efficiently provided by the free market as long as its total benefits exceed its total costs. 
B)  be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. 
C)  be provided in less than efficient quantities by the free market. 
D)  be provided in efficient quantities by voluntary contributions.

Question 17

Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution-control device. What is one measure of the true social cost of coal-fired electricity, in dollars per ton?

Accepted Answer

A)  Private marginal cost plus the $10 replanting charge. 
B)  Private marginal cost plus the $10 emission control charge. 
C)  Only the $20 of replanting and emission control charges, because the other costs are private, not social. 
D)  Private marginal cost plus the $20 of replanting and emission control charges. 
A)  Private marginal cost plus the $10 replanting charge. 
B)  Private marginal cost plus the $10 emission control charge. 
C)  Only the $20 of replanting and emission control charges, because the other costs are private, not social. 
D)  Private marginal cost plus the $20 of replanting and emission control charges.

Question 18

A public good may be defined as any good or service that:

Accepted Answer

A)  must be provided only to certain groups. 
B)  must be distributed to all citizens in equal shares. 
C)  excludes free riders. 
D)  is not exclusive. 
A)  must be provided only to certain groups. 
B)  must be distributed to all citizens in equal shares. 
C)  excludes free riders. 
D)  is not exclusive.

Question 19

The shortage occurs because:

Accepted Answer

A)  the quantity supplied is more than the quantity demanded at this price. 
B)  of the black market. 
C)  the quantity supplied is less than the quantity demanded at this price. 
D)  the price floor was set by the government. 
A)  the quantity supplied is more than the quantity demanded at this price. 
B)  of the black market. 
C)  the quantity supplied is less than the quantity demanded at this price. 
D)  the price floor was set by the government.

Question 20

A price ceiling set below the equilibrium price creates a shortage.

Accepted Answer

A) True 
 B)False

Public goods differ from private goods in that:

Which of the following is a property of a public good?

Market failure because of negative externality results in:

If the market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Which of the following is not a characteristic of a public good?

A public good such as free clean air is available for all users even those who do not pay for the public good.

An increase in the price of plastic raises the cost of manufacturing DVRs. As a result, the market changes to a new equilibrium because of a(n):

An externality is:

Which of the following are not methods of dealing with externalities?

A minimum wage results in:

Which of the following is an example of a positive externality?

Which of the following is a property of a public good?

Which of the following statements is not true of a market?

Suppose the government sets a price floor of $10. It means that the government:

Narrbegin Exhibit 4.4 Demand and supply curves -In Exhibit 4.4, a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

A public good will:

A public good may be defined as any good or service that:

The shortage occurs because:

A price ceiling set below the equilibrium price creates a shortage.

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 5: Markets in Action

Public goods differ from private goods in that:

Which of the following is a property of a public good?

Market failure because of negative externality results in:

If the market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Which of the following is not a characteristic of a public good?

A public good such as free clean air is available for all users even those who do not pay for the public good.

An increase in the price of plastic raises the cost of manufacturing DVRs. As a result, the market changes to a new equilibrium because of a(n):

An externality is:

Which of the following are not methods of dealing with externalities?

A minimum wage results in:

Which of the following is an example of a positive externality?

Which of the following is a property of a public good?

Which of the following statements is not true of a market?

Suppose the government sets a price floor of $10. It means that the government:

Narrbegin Exhibit 4.4 Demand and supply curves -In Exhibit 4.4, a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

A public good will:

A public good may be defined as any good or service that:

The shortage occurs because:

A price ceiling set below the equilibrium price creates a shortage.

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters