Exam 11: Monopolistic Competition and Oligopoly

The basic cause of deadweight losses from the existence of common resources and externalities is

Which of the following could be evidence of a market failure?

Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?

Figure 11-3 Figure 11-3 shows a market with an externality. The current market equilibrium output of Q₁ is not the economically efficient output. The economically efficient output is Q₂. -Refer to Figure 11-3.Suppose the current market equilibrium output of Q₁ is not the economically efficient output because of an externality.The economically efficient output is Q₂.In that case,the diagram shows

Why are many companies concerned about brand management?

Figure 11-8 Figure 11-8 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 11-8.What is the economically efficient output level?

The Coase theorem states that

Figure 11-2 Amit and Bree are the only two homeowners on an isolated private road. Both agree that installing street lights along the road would be beneficial and want to do so. Figure 11-2 shows their willingness to pay for different quantities of street lights, the market demand for street lights and the marginal cost of installing the street lights. -Refer to Figure 11-2.What is the optimal quantity of street lights to install?

When there is a negative externality,the competitive output is more than the economically efficient output level.

Consider a used car market in which half the cars are good and half are bad (lemons).If buyers are rational,the prices being offered for used cars will result in

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

A patent or copyright is a barrier to entry based on

The supply curve of a public goods shows

Consider the following methods of pollution reduction: a.the government sets a target for maximum emissions b.the government mandates the installation of specific pollution abatement equipment c.the government imposes a per unit tax on the good that creates pollution d.the government gives firms a tax rebate for every unit of pollution abated Which of the above is an example of a command and control approach to reducing pollution?

If the social benefit of consuming a good or a service exceeds the private benefit,

The 'tragedy of the commons' refers to the phenomenon where

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons?

When there is a positive externality in a free market,too much of the good is produced and consumed.

Figure 11-5 -Refer to Figure 11-5.In the absence of any government intervention,the private market

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.