Question 1

Figure 11-1  
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

Accepted Answer

A)  the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B)  producers should lower the price to $3 in order to sell the quantity demanded of 4000. 
C)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. 
A)  the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B)  producers should lower the price to $3 in order to sell the quantity demanded of 4000. 
C)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

Question 2

Which of the following would result in a positive externality?

Accepted Answer

A)  A local government establishes a price ceiling on rental apartments. 
B)  An electric utility burns coal that causes acid rain. 
C)  Medical research results in a cure for malaria. 
D)  McDonald's adds new fat-free items to its menu. 
A)  A local government establishes a price ceiling on rental apartments. 
B)  An electric utility burns coal that causes acid rain. 
C)  Medical research results in a cure for malaria. 
D)  McDonald's adds new fat-free items to its menu.

Question 3

Economists often analyse the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others,a process that is referred to as

Accepted Answer

A)  rent seeking. 
B)  logrolling. 
C)  government failure. 
D)  the public choice initiative. 
A)  rent seeking. 
B)  logrolling. 
C)  government failure. 
D)  the public choice initiative.

Question 4

Figure 11-10   Consider a chemical plant that discharges toxic fumes over a nearby community. To reduce the emissions of toxic fumes, the firm can install pollution abatement devices. Figure 11-10 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.
-Refer to Figure 11-10.Suppose the emissions reduction target is currently established at 8 million tons.What is the area that represents the cost of eliminating an additional 1 million tons?

Accepted Answer

A)  A 
B)  B + C 
C)  A + B 
D)  A + B + C 
A)  A 
B)  B + C 
C)  A + B 
D)  A + B + C

Question 5

When the government wants to give an exclusive right to one firm to produce a product,it

Accepted Answer

A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market. 
A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market.

Question 6

For the Coase theorem to work,there must be clear assignment of property rights.

Accepted Answer

A) True 
 B)False

Question 7

Economists argue that the level of pollution should be

Accepted Answer

A)  reduced completely to zero because, by definition, it is a negative external effect. 
B)  ignored because it has always been present since the beginning of history. 
C)  reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society. 
D)  best determined by elected officials who can speak on behalf of the public. 
A)  reduced completely to zero because, by definition, it is a negative external effect. 
B)  ignored because it has always been present since the beginning of history. 
C)  reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society. 
D)  best determined by elected officials who can speak on behalf of the public.

Question 8

What is rent seeking and how is it related to regulatory capture?

Accepted Answer

Rent seeking is the attempt by individua

Question 9

Which of the following displays these two characteristics: non-rivalry and non-excludability in consumption?

Accepted Answer

A)  Public goods 
B)  Private goods 
C)  Quasi-public goods 
D)  Common resources 
A)  Public goods 
B)  Private goods 
C)  Quasi-public goods 
D)  Common resources

Question 10

When a negative externality exists,the private market produces

Accepted Answer

A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost. 
A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost.

Question 11

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems,the insurance company is trying to reduce

Accepted Answer

A)  the problem of adverse selection. 
B)  the moral hazard problem. 
C)  sunk costs. 
D)  asymmetric information. 
A)  the problem of adverse selection. 
B)  the moral hazard problem. 
C)  sunk costs. 
D)  asymmetric information.

Question 12

A market supply curve reflects the

Accepted Answer

A)  external costs of producing a good or service. 
B)  external benefits of producing a good or service. 
C)  social costs of producing a good or service. 
D)  private costs of producing a good or service. 
A)  external costs of producing a good or service. 
B)  external benefits of producing a good or service. 
C)  social costs of producing a good or service. 
D)  private costs of producing a good or service.

Question 13

Which of the following is an example of a quasi-public good?

Accepted Answer

A)  Cable television 
B)  Organic apples 
C)  Stock of knowledge in the public domain 
D)  Crime prevention 
A)  Cable television 
B)  Organic apples 
C)  Stock of knowledge in the public domain 
D)  Crime prevention

Question 14

Common resources differ from public goods in that

Accepted Answer

A)  common resources are non-excludable while public goods are excludable to those who do not pay for the good. 
B)  unlike public goods, common resources are rival in consumption. 
C)  common resources are collectively owned by a group of people while public goods are government owned. 
D)  common resources are resources that cannot be renewed, but the production of public goods can be increased any time. 
A)  common resources are non-excludable while public goods are excludable to those who do not pay for the good. 
B)  unlike public goods, common resources are rival in consumption. 
C)  common resources are collectively owned by a group of people while public goods are government owned. 
D)  common resources are resources that cannot be renewed, but the production of public goods can be increased any time.

Question 15

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production,and consumer surplus plus producer surplus is maximised,then

Accepted Answer

A)  maximum deadweight loss occurs. 
B)  economic efficiency is achieved. 
C)  profits are maximised. 
D)  costs are minimised. 
A)  maximum deadweight loss occurs. 
B)  economic efficiency is achieved. 
C)  profits are maximised. 
D)  costs are minimised.

Question 16

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an example of a product that is non-excludable and rival?

Accepted Answer

A)  A free concert (with limited seating) in a park 
B)  National defence 
C)  Automobiles 
D)  Flu vaccinations 
A)  A free concert (with limited seating) in a park 
B)  National defence 
C)  Automobiles 
D)  Flu vaccinations

Question 18

What is a Pigovian tax? What happens to deadweight loss when a Pigovian tax is implemented?

Accepted Answer

A Pigovian tax is a government

Question 19

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Accepted Answer

A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimised. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimised. 
A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimised. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimised.

Question 20

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 does D2 represent?

Accepted Answer

A)  The social welfare curve. 
B)  The demand curve reflecting social benefit. 
C)  The demand curve reflecting private benefit. 
D)  The positive externalities curve. 
A)  The social welfare curve. 
B)  The demand curve reflecting social benefit. 
C)  The demand curve reflecting private benefit. 
D)  The positive externalities curve.

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

Which of the following would result in a positive externality?

Economists often analyse the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others,a process that is referred to as

When the government wants to give an exclusive right to one firm to produce a product,it

For the Coase theorem to work,there must be clear assignment of property rights.

Economists argue that the level of pollution should be

What is rent seeking and how is it related to regulatory capture?

Which of the following displays these two characteristics: non-rivalry and non-excludability in consumption?

When a negative externality exists,the private market produces

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems,the insurance company is trying to reduce

A market supply curve reflects the

Which of the following is an example of a quasi-public good?

Common resources differ from public goods in that

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production,and consumer surplus plus producer surplus is maximised,then

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

Which of the following is an example of a product that is non-excludable and rival?

What is a Pigovian tax? What happens to deadweight loss when a Pigovian tax is implemented?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

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 does D2 represent?

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

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

Which of the following would result in a positive externality?

Economists often analyse the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others,a process that is referred to as

When the government wants to give an exclusive right to one firm to produce a product,it

For the Coase theorem to work,there must be clear assignment of property rights.

Economists argue that the level of pollution should be

What is rent seeking and how is it related to regulatory capture?

Which of the following displays these two characteristics: non-rivalry and non-excludability in consumption?

When a negative externality exists,the private market produces

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems,the insurance company is trying to reduce

A market supply curve reflects the

Which of the following is an example of a quasi-public good?

Common resources differ from public goods in that

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production,and consumer surplus plus producer surplus is maximised,then

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

Which of the following is an example of a product that is non-excludable and rival?

What is a Pigovian tax? What happens to deadweight loss when a Pigovian tax is implemented?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

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 does D2 represent?

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