Question 1

Which of the following is an example of a common resource?

Accepted Answer

A)  Elephants in the wild 
B)  Lions in a zoo 
C)  A university education 
D)  Public transportation 
A)  Elephants in the wild 
B)  Lions in a zoo 
C)  A university education 
D)  Public transportation

Question 2

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

Accepted Answer

A) True 
 B)False

Question 3

A product is considered to be rival if

Accepted Answer

A)  you can keep those who did not pay for the item from enjoying its benefits. 
B)  you cannot keep those who did not pay for the item from enjoying its benefits. 
C)  your consumption of the product reduces the quantity available for others to consume. 
D)  it is jointly owned by all members of a community. 
A)  you can keep those who did not pay for the item from enjoying its benefits. 
B)  you cannot keep those who did not pay for the item from enjoying its benefits. 
C)  your consumption of the product reduces the quantity available for others to consume. 
D)  it is jointly owned by all members of a community.

Question 4

Figure 11-9  
-Refer to Figure 11-9.The marginal benefit of reducing pollution curve is the same curve as

Accepted Answer

A)  the supply of pollution reduction curve. 
B)  the demand for pollution reduction curve. 
C)  the positive externality curve. 
D)  the external benefit curve. 
A)  the supply of pollution reduction curve. 
B)  the demand for pollution reduction curve. 
C)  the positive externality curve. 
D)  the external benefit curve.

Question 5

If transactions costs are low,private bargaining will always result in an efficient solution to the problem of externalities.

Accepted Answer

A) True 
 B)False

Question 6

A market failure arises when an entire sector of the economy (for example,the airline industry)collapses because of some unforeseen event.

Accepted Answer

A) True 
 B)False

Question 7

A successful trademark is one that becomes a generic name for a product,for example,'Kleenex' has become a generic term for tissues.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following conditions holds in an economically efficient competitive market equilibrium?

Accepted Answer

A)  The deadweight loss is positive but at a minimum. 
B)  Producer and consumer surplus are exactly equal in size. 
C)  There are no positive and no negative external effects from consumption and production. 
D)  The marginal benefit of the last unit produced and consumed is maximised. 
A)  The deadweight loss is positive but at a minimum. 
B)  Producer and consumer surplus are exactly equal in size. 
C)  There are no positive and no negative external effects from consumption and production. 
D)  The marginal benefit of the last unit produced and consumed is maximised.

Question 9

A.C.Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality.

Accepted Answer

A) True 
 B)False

Question 10

Figure 11-6   Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river, and the use of the river for recreation and as a public water supply source. Figure 11-6 shows the paper market. Use this Figure to answer the following question(s).
-Refer to Figure 11-6.Why is there a deadweight loss?

Accepted Answer

A)  Because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit. 
B)  Because the marginal private cost of producing each additional unit in excess of Q2 exceeds the marginal benefit. 
C)  Because the marginal social benefit of producing each additional unit in excess of Q2 exceeds the private cost. 
D)  Because the marginal private benefit of producing each additional unit in excess of Q2 exceeds the social cost. 
A)  Because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit. 
B)  Because the marginal private cost of producing each additional unit in excess of Q2 exceeds the marginal benefit. 
C)  Because the marginal social benefit of producing each additional unit in excess of Q2 exceeds the private cost. 
D)  Because the marginal private benefit of producing each additional unit in excess of Q2 exceeds the social cost.

Question 11

Which of the following is a source of market failure?

Accepted Answer

A)  Unforeseen circumstances which lead to the bankruptcy of many firms 
B)  A lack of government intervention in a market 
C)  Incomplete property rights or inability to enforce property rights 
D)  An inequitable income distribution 
A)  Unforeseen circumstances which lead to the bankruptcy of many firms 
B)  A lack of government intervention in a market 
C)  Incomplete property rights or inability to enforce property rights 
D)  An inequitable income distribution

Question 12

Figure 11-9  
-Refer to Figure 11-9.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Accepted Answer

A)  PF 
B)  PF × QE 
C)  The value of the area BEF 
D)  The value of the area QBBFQE 
A)  PF 
B)  PF × QE 
C)  The value of the area BEF 
D)  The value of the area QBBFQE

Question 13

Classifying a good as rival means

Accepted Answer

A)  that the good is produced in a competitive market. 
B)  that there is a shortage of the good. 
C)  that when one person consumes a unit of the good, no one else can consume it. 
D)  anyone who does not pay for the good cannot consume it. 
A)  that the good is produced in a competitive market. 
B)  that there is a shortage of the good. 
C)  that when one person consumes a unit of the good, no one else can consume it. 
D)  anyone who does not pay for the good cannot consume it.

Question 14

Health insurance companies impose deductibles on policies and co-payments on claims

Accepted Answer

A)  to increase sales. 
B)  to reduce moral hazard problems. 
C)  to reduce sunk costs. 
D)  to increase prices. 
A)  to increase sales. 
B)  to reduce moral hazard problems. 
C)  to reduce sunk costs. 
D)  to increase prices.

Question 15

A product is considered to be non-excludable if

Accepted Answer

A)  you can keep those who did not pay for the item from enjoying its benefits. 
B)  you cannot keep those who did not pay for the item from enjoying its benefits. 
C)  your consumption of the product reduces the quantity available for others to consume. 
D)  it is jointly owned by all members of a community. 
A)  you can keep those who did not pay for the item from enjoying its benefits. 
B)  you cannot keep those who did not pay for the item from enjoying its benefits. 
C)  your consumption of the product reduces the quantity available for others to consume. 
D)  it is jointly owned by all members of a community.

Question 16

A private good is

Accepted Answer

A)  a good that is rival and non-excludable. 
B)  a good that is non-rival and non-excludable. 
C)  a good that is rival and excludable. 
D)  a good that is non-rival and excludable. 
A)  a good that is rival and non-excludable. 
B)  a good that is non-rival and non-excludable. 
C)  a good that is rival and excludable. 
D)  a good that is non-rival and excludable.

Question 17

When there is an externality in a market,

Accepted Answer

A)  the externality will move the market to an economically efficient equilibrium. 
B)  the externality will cause the market price to be less than or greater than the equilibrium price. 
C)  the government should use price controls to enable the market to reach equilibrium. 
D)  government intervention may increase economic efficiency. 
A)  the externality will move the market to an economically efficient equilibrium. 
B)  the externality will cause the market price to be less than or greater than the equilibrium price. 
C)  the government should use price controls to enable the market to reach equilibrium. 
D)  government intervention may increase economic efficiency.

Question 18

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 19

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 maximised. 
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 maximised. 
C)  the market achieves economic efficiency. 
D)  a negative externality exists.

Question 20

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

Accepted Answer

A)  Non-rivalry and non-excludability 
B)  Government intervention and low prices 
C)  Market failure and high prices 
D)  Rivalry and exclusivity 
A)  Non-rivalry and non-excludability 
B)  Government intervention and low prices 
C)  Market failure and high prices 
D)  Rivalry and exclusivity

Which of the following is an example of a common resource?

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

A product is considered to be rival if

Figure 11-9 -Refer to Figure 11-9.The marginal benefit of reducing pollution curve is the same curve as

If transactions costs are low,private bargaining will always result in an efficient solution to the problem of externalities.

A market failure arises when an entire sector of the economy (for example,the airline industry)collapses because of some unforeseen event.

A successful trademark is one that becomes a generic name for a product,for example,'Kleenex' has become a generic term for tissues.

Which of the following conditions holds in an economically efficient competitive market equilibrium?

A.C.Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality.

Which of the following is a source of market failure?

Figure 11-9 -Refer to Figure 11-9.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Classifying a good as rival means

Health insurance companies impose deductibles on policies and co-payments on claims

A product is considered to be non-excludable if

A private good is

When there is an externality in a market,

Classifying a good as excludable means

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

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 11: Monopolistic Competition and Oligopoly

Which of the following is an example of a common resource?

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

A product is considered to be rival if

Figure 11-9 -Refer to Figure 11-9.The marginal benefit of reducing pollution curve is the same curve as

If transactions costs are low,private bargaining will always result in an efficient solution to the problem of externalities.

A market failure arises when an entire sector of the economy (for example,the airline industry)collapses because of some unforeseen event.

A successful trademark is one that becomes a generic name for a product,for example,'Kleenex' has become a generic term for tissues.

Which of the following conditions holds in an economically efficient competitive market equilibrium?

A.C.Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality.

Which of the following is a source of market failure?

Figure 11-9 -Refer to Figure 11-9.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Classifying a good as rival means

Health insurance companies impose deductibles on policies and co-payments on claims

A product is considered to be non-excludable if

A private good is

When there is an externality in a market,

Classifying a good as excludable means

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

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters