Exam 11: Monopolistic Competition and Oligopoly

'Free riding' is a characteristic of which type of good?

A product is considered to be excludable if it is jointly owned by all members of a community.

Governments can increase the consumption of a product that creates positive externalities by

Governments grant patents to encourage

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

The social benefit of a given level of a public good is the vertical sum of all private benefits for that level.

Private costs

In the highly competitive fast-food restaurant market,brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

What does the phrase 'internalising an external cost' mean?

A tragedy of the commons occurs when a resource is

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

One problem with using a command and control approach to pollution reduction is that the monitoring costs may be too high.

If there is pollution in producing a product,then the market equilibrium price is too high and equilibrium quantity is too low.

Suppose that in a market for used cars,there are good used cars and bad used cars (lemons).Consumers are willing to pay as much as $6000 for a good used car but only $1000 for a lemon.Sellers of good used cars value their cars at $5000 each and sellers of lemons value their cars at $800 each.Buyers cannot tell if a used car is reliable or is a lemon.Based on this information,what is the likely outcome in the market for used cars?

Figure 11-11 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 11-11 illustrates the situation in the toilet paper market. -Refer to Figure 11-11.The private profit-maximising output level is

All of the following are examples of public goods except

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

When the government imposes a tax equal to the external cost of producing a product that causes pollution,the government is said to externalise the externality.

Parents who do not have their children immunised and attempt to benefit from other parents who did have their own children immunised are exhibiting an economic behaviour known as

The efficient output level of a public good occurs where the