Question 1

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Figure 5-13   Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production.
-Refer to Figure 5-13.The market equilibrium quantity of gasoline is ________ million gallons per month.

Accepted Answer

A)  20 
B)  32 
C)  48 
D)  56 
A)  20 
B)  32 
C)  48 
D)  56

Question 5

Which of the following exemplifies the tragedy of the commons?

Accepted Answer

A)  Residents on the northern coast of California receive only one public broadcasting signal which may be eliminated altogether if government funding is cut. 
B)  The Pleasant Hill community is growing so fast that the city's only post office is not able to keep pace with the population growth in the community. 
C)  Canadian citizens receive free universal health care administered by provincial governments. 
D)  The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who hunt it for its tough and leathery hide. 
A)  Residents on the northern coast of California receive only one public broadcasting signal which may be eliminated altogether if government funding is cut. 
B)  The Pleasant Hill community is growing so fast that the city's only post office is not able to keep pace with the population growth in the community. 
C)  Canadian citizens receive free universal health care administered by provincial governments. 
D)  The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who hunt it for its tough and leathery hide.

Question 6

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

Accepted Answer

A) True 
 B)False

Question 7

An external cost is created when you

Accepted Answer

A)  graduate from college. 
B)  buy flowers for your mother on Mother's Day. 
C)  litter on the side of the road. 
D)  buy a sandwich for lunch. 
A)  graduate from college. 
B)  buy flowers for your mother on Mother's Day. 
C)  litter on the side of the road. 
D)  buy a sandwich for lunch.

Question 8

Figure 5-7  
-Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from QB to QE units?

Accepted Answer

A)  PE 
B)  the value of the area QBBEQE 
C)  PE × QE 
D)  the value of the area BEF 
A)  PE 
B)  the value of the area QBBEQE 
C)  PE × QE 
D)  the value of the area BEF

Question 9

Article Summary
According to a study by the Center for Neighborhood Technology, homes located within one-half mile of frequently-used public transportation held their value much better during the recent housing market downturn than did those without easy access to public transportation, and the greater home values reflect greater demand for neighborhoods in close proximity to public transportation. In addition to higher home values, the study found that close proximity to public transportation offers lower transportation costs, a wider variety of travel options, and access to more employment opportunities.
Source: Meg Handley, "Study: Proximity to Public Transit Boosts Home Values," U.S. News & World Report, March 22, 2013.
-Refer to the Article Summary.People who do not use public transportation can still benefit from it,as is shown by the higher home values.As a result,the marginal social benefit from public transportation is ________ the marginal private benefit to those who use public transportation.

Accepted Answer

A)  equal to 
B)  greater than 
C)  less than 
D)  unrelated to 
A)  equal to 
B)  greater than 
C)  less than 
D)  unrelated to

Question 10

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

Accepted Answer

A)  access to the commons can be restricted through community norms and laws 
B)  offer subsidies to consumers 
C)  force people to move away from the commons 
D)  persuade people to use less of the scarce resource through an advertising campaign 
A)  access to the commons can be restricted through community norms and laws 
B)  offer subsidies to consumers 
C)  force people to move away from the commons 
D)  persuade people to use less of the scarce resource through an advertising campaign

Question 11

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 12

A free market fails when

Accepted Answer

A)  there is government intervention. 
B)  there is an external effect in either production, consumption, or both. 
C)  firms that produce goods which create positive externalities go bankrupt. 
D)  firms that produce goods which create negative externalities earn high profits. 
A)  there is government intervention. 
B)  there is an external effect in either production, consumption, or both. 
C)  firms that produce goods which create positive externalities go bankrupt. 
D)  firms that produce goods which create negative externalities earn high profits.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

In the city of Alvarez,with the exception of guide dogs for blind people,all dogs are banned from its three public parks,regardless of whether the animals are leashed.Many residents are pushing for a change in policy.Canine lover Sara Northridge observed,"There are 800 or more homes here.There are three parks within 10 minutes,and almost everyone has a dog,but we can't take our dogs there." Others fear that allowing dogs would detract from their enjoyment of the parks.Tim Cortis retorted,"We're not preventing dog lovers from enjoying the park,just come without your dog." Which of the following is a way of dealing with the problem by assigning property rights to a particular group?

Accepted Answer

A)  impose a two-tier entry fee system - a lower fee for non dog owners and a higher fee for dog owners 
B)  impose a fee only for dog-owners to use the public parks; non dog owners do not pay a fee 
C)  dedicate some parks, or at least one park, exclusively for the use of visitors bringing dogs to the park 
D)  allow dog owners to bring their dogs to the park but insist that they keep watch over their dogs 
A)  impose a two-tier entry fee system - a lower fee for non dog owners and a higher fee for dog owners 
B)  impose a fee only for dog-owners to use the public parks; non dog owners do not pay a fee 
C)  dedicate some parks, or at least one park, exclusively for the use of visitors bringing dogs to the park 
D)  allow dog owners to bring their dogs to the park but insist that they keep watch over their dogs

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

Accepted Answer

If harmed parties do not have rights or

Question 17

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

Accepted Answer

A)  individuals are free riders. 
B)  people overuse a common resource. 
C)  people do not internalize an externality. 
D)  there is rivalry in consumption. 
A)  individuals are free riders. 
B)  people overuse a common resource. 
C)  people do not internalize an externality. 
D)  there is rivalry in consumption.

Question 18

The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called

Accepted Answer

A)  enforcement costs. 
B)  implicit costs. 
C)  explicit costs. 
D)  transaction costs. 
A)  enforcement costs. 
B)  implicit costs. 
C)  explicit costs. 
D)  transaction costs.

Question 19

Figure 5-7  
-Refer to Figure 5-7.Which of the following statements is true?

Accepted Answer

A)  At QE the benefits of reducing pollution outweighs the cost of pollution reduction. 
B)  At QB society is under allocating resources to pollution reduction. 
C)  The optimal quantity of pollution reduction is QB. 
D)  The optimal quantity of pollution reduction is QE. 
A)  At QE the benefits of reducing pollution outweighs the cost of pollution reduction. 
B)  At QB society is under allocating resources to pollution reduction. 
C)  The optimal quantity of pollution reduction is QB. 
D)  The optimal quantity of pollution reduction is QE.

Question 20

Pollution is an example of a

Accepted Answer

A)  public good. 
B)  positive externality. 
C)  private cost. 
D)  negative externality 
A)  public good. 
B)  positive externality. 
C)  private cost. 
D)  negative externality

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

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

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.

Figure 5-13 Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13.The market equilibrium quantity of gasoline is ________ million gallons per month.

Which of the following exemplifies the tragedy of the commons?

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

An external cost is created when you

Figure 5-7 -Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from Q_Bto Q_Eunits?

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

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

A free market fails when

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

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

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

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

The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called

Figure 5-7 -Refer to Figure 5-7.Which of the following statements is true?

Pollution is an example of a

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Exam 5: Externalities, environmental Policy, and Public Goods

Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than is socially desirable.

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

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.

Figure 5-13 Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13.The market equilibrium quantity of gasoline is ________ million gallons per month.

Which of the following exemplifies the tragedy of the commons?

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

An external cost is created when you

Figure 5-7 -Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from QB to QE units?

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

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

A free market fails when

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

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

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

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

The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called

Figure 5-7 -Refer to Figure 5-7.Which of the following statements is true?

Pollution is an example of a

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Figure 5-7 -Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from Q_Bto Q_Eunits?