Question 1

The reason why national defense is commonly provided by the government, while food is not, is that food:

Accepted Answer

A) is too essential to survival to be provided by a bureaucratic organization. 
B) ​manufacturers have successfully lobbied the government to stay out of the food industry. 
C) can easily be withheld from those who refuse to pay for it. 
D) provision is subject to a free-rider problem. 
A) is too essential to survival to be provided by a bureaucratic organization. 
B) ​manufacturers have successfully lobbied the government to stay out of the food industry. 
C) can easily be withheld from those who refuse to pay for it. 
D) provision is subject to a free-rider problem.

Question 2

Under the pollution rights approach, polluters have little or no incentive to develop improved pollution abatement technologies.

Accepted Answer

A) True 
 B)False

Question 3

Private goods ____ rival ____ excludable.

Accepted Answer

A) Are, and are 
B) ​Are, but are not 
C) Are not, but are 
D) Are not, and are not 
A) Are, and are 
B) ​Are, but are not 
C) Are not, but are 
D) Are not, and are not

Question 4

The Coase theorem implies that an efficient solution is possible only if property rights are well-defined and transactions costs are low.

Accepted Answer

A) True 
 B)False

Question 5

Why do most economists favor emissions taxes and transferable pollution rights over compliance standards as pollution deterrents?

Accepted Answer

Compliance standards do not consider whi

Question 6

Factory A can reduce emissions at a cost of $150 per ton. Factory B can reduce emissions at a cost of $115 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:

Accepted Answer

A) ​Factory A can profit from selling its pollution rights to Factory B. 
B) ​Both firms have an incentive to buy pollution rights. 
C) ​Factory B can profit from selling its pollution rights to Factory A. 
D) ​Both firms have an incentive to sell pollution rights. 
A) ​Factory A can profit from selling its pollution rights to Factory B. 
B) ​Both firms have an incentive to buy pollution rights. 
C) ​Factory B can profit from selling its pollution rights to Factory A. 
D) ​Both firms have an incentive to sell pollution rights.

Question 7

Which of the following is (are) true when one firm's research and production can increase another firm's access to technological advances?

Accepted Answer

A) ​It is called a technology spillover. 
B) ​Other firms will imitate and improve on the new knowledge. 
C) ​If there is no subsidy, the market equilibrium output level is less than the efficient equilibrium output level. 
D) ​All of the above. 
A) ​It is called a technology spillover. 
B) ​Other firms will imitate and improve on the new knowledge. 
C) ​If there is no subsidy, the market equilibrium output level is less than the efficient equilibrium output level. 
D) ​All of the above.

Question 8

An example of a public good is:

Accepted Answer

A) ​a tornado siren. 
B) a cake. 
C) ​a personal computer. 
D) ​a DVD player. 
A) ​a tornado siren. 
B) a cake. 
C) ​a personal computer. 
D) ​a DVD player.

Question 9

If the government overcorrected in a situation of external costs

Accepted Answer

A) ​More than the efficient amount of the good would end up being produced. 
B) ​Less than the efficient amount of the good would end up being produced. 
C) ​It would result in a welfare cost in that market that was bigger than the initial welfare cost. 
D) Both a and c are would result. 
A) ​More than the efficient amount of the good would end up being produced. 
B) ​Less than the efficient amount of the good would end up being produced. 
C) ​It would result in a welfare cost in that market that was bigger than the initial welfare cost. 
D) Both a and c are would result.

Question 10

As an additional consumer obtains the benefits of a public good such as national defense, the benefits to existing consumers:

Accepted Answer

A) ​decline. 
B) ​increase. 
C) ​increase in the short run, but decrease in the long run. 
D) ​do not change. 
A) ​decline. 
B) ​increase. 
C) ​increase in the short run, but decrease in the long run. 
D) ​do not change.

Question 11

The failure of private incentives to provide adequate maintenance of public resources leads to the tragedy of the commons.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following activities, if any, represents an external cost?

Accepted Answer

A) ​The benefits that accrue to society when an individual receives a college education. 
B) ​The increase in property values of vacant lots in an area near where a new amusement park is constructed. 
C) ​The pollination of apple trees that occurs when a beekeeper locates next door to an apple orchard. 
D) ​None of the above 
A) ​The benefits that accrue to society when an individual receives a college education. 
B) ​The increase in property values of vacant lots in an area near where a new amusement park is constructed. 
C) ​The pollination of apple trees that occurs when a beekeeper locates next door to an apple orchard. 
D) ​None of the above

Question 13

Common property resources ____ rival ____ excludable.

Accepted Answer

A) are, and are 
B) ​Are, but are not 
C) Are not, but are 
D) Are not, and are not 
A) are, and are 
B) ​Are, but are not 
C) Are not, but are 
D) Are not, and are not

Question 14

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are equal in magnitude to the external costs,

Accepted Answer

A) ​More than the efficient amount is being produced 
B) ​Less than the efficient amount is being produced 
C) ​the efficient amount is being produced 
D) ​We do not know whether the efficient amount, or more or less, is being produced. 
A) ​More than the efficient amount is being produced 
B) ​Less than the efficient amount is being produced 
C) ​the efficient amount is being produced 
D) ​We do not know whether the efficient amount, or more or less, is being produced.

Question 15

If a subsidy was imposed on an industry whose production imposed external benefits on others, then the goods' consumers of the good would be ____ and the result would be a(n) ____ in efficiency.

Accepted Answer

A) ​better off; increase. 
B) ​better off; decrease. 
C) ​worse off; increase. 
D) ​worse off; decrease. 
A) ​better off; increase. 
B) ​better off; decrease. 
C) ​worse off; increase. 
D) ​worse off; decrease.

Question 16

Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When Tom's grass is neglected and gets long, Nancy will mow for Tom. This is an example of:

Accepted Answer

A) ​the fallacy of composition. 
B) ​a pollution tax. 
C) ​a private solution to a negative externality problem. 
D) ​how lazy Tom is. 
A) ​the fallacy of composition. 
B) ​a pollution tax. 
C) ​a private solution to a negative externality problem. 
D) ​how lazy Tom is.

Question 17

If a developer plans to build a skyscraper in a major city overshadowing an historic church, could an efficient solution be reached if the church had the legal right to prevent the developer from building in that location? Why or why not?
​

Accepted Answer

Yes, an efficient solution could be reac

Question 18

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are less than the external costs,

Accepted Answer

A) ​Taxing it could bring us closer to the efficient solution 
B) ​Subsidizing it could bring us closer to the efficient solution 
C) ​Neither a tax or a subsidy could bring us closer to the efficient solution 
D) ​None of the above is true. 
A) ​Taxing it could bring us closer to the efficient solution 
B) ​Subsidizing it could bring us closer to the efficient solution 
C) ​Neither a tax or a subsidy could bring us closer to the efficient solution 
D) ​None of the above is true.

Question 19

Private costs are those borne by:

Accepted Answer

A) ​the government. 
B) ​the producer of an item. 
C) ​both an item's producer and outside parties affected by a negative externality. 
D) ​outside parties affected by a negative externality. 
A) ​the government. 
B) ​the producer of an item. 
C) ​both an item's producer and outside parties affected by a negative externality. 
D) ​outside parties affected by a negative externality.

The reason why national defense is commonly provided by the government, while food is not, is that food:

Under the pollution rights approach, polluters have little or no incentive to develop improved pollution abatement technologies.

Private goods rival excludable.

The Coase theorem implies that an efficient solution is possible only if property rights are well-defined and transactions costs are low.

Why do most economists favor emissions taxes and transferable pollution rights over compliance standards as pollution deterrents?

Factory A can reduce emissions at a cost of $150 per ton. Factory B can reduce emissions at a cost of $115 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:

Which of the following is (are) true when one firm's research and production can increase another firm's access to technological advances?

An example of a public good is:

If the government overcorrected in a situation of external costs

As an additional consumer obtains the benefits of a public good such as national defense, the benefits to existing consumers:

The failure of private incentives to provide adequate maintenance of public resources leads to the tragedy of the commons.

Which of the following activities, if any, represents an external cost?

Common property resources rival excludable.

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are equal in magnitude to the external costs,

If a subsidy was imposed on an industry whose production imposed external benefits on others, then the goods' consumers of the good would be and the result would be a(n) in efficiency.

Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When Tom's grass is neglected and gets long, Nancy will mow for Tom. This is an example of:

If a developer plans to build a skyscraper in a major city overshadowing an historic church, could an efficient solution be reached if the church had the legal right to prevent the developer from building in that location? Why or why not?

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are less than the external costs,

Private costs are those borne by:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 8: Market Failure

The reason why national defense is commonly provided by the government, while food is not, is that food:

Under the pollution rights approach, polluters have little or no incentive to develop improved pollution abatement technologies.

Private goods ____ rival ____ excludable.

The Coase theorem implies that an efficient solution is possible only if property rights are well-defined and transactions costs are low.

Why do most economists favor emissions taxes and transferable pollution rights over compliance standards as pollution deterrents?

Factory A can reduce emissions at a cost of $150 per ton. Factory B can reduce emissions at a cost of $115 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:

Which of the following is (are) true when one firm's research and production can increase another firm's access to technological advances?

An example of a public good is:

If the government overcorrected in a situation of external costs

As an additional consumer obtains the benefits of a public good such as national defense, the benefits to existing consumers:

The failure of private incentives to provide adequate maintenance of public resources leads to the tragedy of the commons.

Which of the following activities, if any, represents an external cost?

Common property resources ____ rival ____ excludable.

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are equal in magnitude to the external costs,

If a subsidy was imposed on an industry whose production imposed external benefits on others, then the goods' consumers of the good would be ____ and the result would be a(n) ____ in efficiency.

Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When Tom's grass is neglected and gets long, Nancy will mow for Tom. This is an example of:

If a developer plans to build a skyscraper in a major city overshadowing an historic church, could an efficient solution be reached if the church had the legal right to prevent the developer from building in that location? Why or why not? ​

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are less than the external costs,

Private costs are those borne by:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Private goods rival excludable.

Common property resources rival excludable.

If a subsidy was imposed on an industry whose production imposed external benefits on others, then the goods' consumers of the good would be and the result would be a(n) in efficiency.

If a developer plans to build a skyscraper in a major city overshadowing an historic church, could an efficient solution be reached if the church had the legal right to prevent the developer from building in that location? Why or why not?