Question 1

A marketable permit

Accepted Answer

A) allows firms to pollute all they want without any cost. 
B) allows firms to buy and sell the right to pollute at government controlled prices. 
C) eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D) allows firms to buy and sell the right to pollute. 
E) is the Coase theorem solution to pollution. 
A) allows firms to pollute all they want without any cost. 
B) allows firms to buy and sell the right to pollute at government controlled prices. 
C) eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. 
D) allows firms to buy and sell the right to pollute. 
E) is the Coase theorem solution to pollution.

Question 2

Suppose two neighborhoods with 10 homes each in Buffalo,New York are identical except one of them is near a toxic waste dump.If homes near the dump sell for an average of $40,000 and the other homes sell for $90,000,the external cost of the dump is

Accepted Answer

A) $400,000. 
B) $1,300,000. 
C) $900,000. 
D) $500,000. 
E) $90,000. 
A) $400,000. 
B) $1,300,000. 
C) $900,000. 
D) $500,000. 
E) $90,000.

Question 3

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

Accepted Answer

A) zero. 
B) the area d. 
C) the area a + c. 
D) the area b + c. 
E) the area b + d. 
A) zero. 
B) the area d. 
C) the area a + c. 
D) the area b + c. 
E) the area b + d.

Question 4

Which of the following best describes an externality?

Accepted Answer

A) something that is external to the economy 
B) a sales tax on a good in addition to the market price 
C) an effect of a transaction felt by someone other than the buyer or seller 
D) anything produced in other countries 
E) a change from what is normal 
A) something that is external to the economy 
B) a sales tax on a good in addition to the market price 
C) an effect of a transaction felt by someone other than the buyer or seller 
D) anything produced in other countries 
E) a change from what is normal

Question 5

Which of the following is an example of an activity that creates an external cost?
I.a smoker emitting second-hand smoke
Ii.sulfur emitting from a smoke stack
Iii.throwing garbage on the roadside

Accepted Answer

A) i only 
B) i and ii 
C) iii only 
D) ii and iii 
E) i,ii,and iii 
A) i only 
B) i and ii 
C) iii only 
D) ii and iii 
E) i,ii,and iii

Question 6

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

Accepted Answer

A) $4,000 
B) $8,000 
C) $12,000 
D) $16,000 
E) $20,000 
A) $4,000 
B) $8,000 
C) $12,000 
D) $16,000 
E) $20,000

Question 7

If producing a good or a service creates pollution,then

Accepted Answer

A) an unregulated competitive market produces an efficient output. 
B) the industry's supply curve includes the extra cost of pollution. 
C) at the unregulated,competitive market equilibrium quantity,marginal social cost is greater than the equilibrium price. 
D) at the unregulated,competitive market equilibrium quantity,marginal social benefit and marginal social cost are equal. 
E) at the unregulated,competitive market equilibrium quantity,marginal social benefit is less than the equilibrium price. 
A) an unregulated competitive market produces an efficient output. 
B) the industry's supply curve includes the extra cost of pollution. 
C) at the unregulated,competitive market equilibrium quantity,marginal social cost is greater than the equilibrium price. 
D) at the unregulated,competitive market equilibrium quantity,marginal social benefit and marginal social cost are equal. 
E) at the unregulated,competitive market equilibrium quantity,marginal social benefit is less than the equilibrium price.

Question 8

An external cost in the production of a good creates a difference between the
I.costs borne by the producer and the costs borne by society in general.
Ii.efficient quantity of output and the equilibrium quantity of output.
Iii.marginal social cost and the marginal private cost.

Accepted Answer

A) i only 
B) iii only 
C) ii and iii 
D) i,ii,and iii 
E) i and iii 
A) i only 
B) iii only 
C) ii and iii 
D) i,ii,and iii 
E) i and iii

Question 9

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

Accepted Answer

A) 8;$150 
B) 8;$300 
C) 10;$250 
D) 10;$100 
E) 10;$150 
A) 8;$150 
B) 8;$300 
C) 10;$250 
D) 10;$100 
E) 10;$150

Question 10

Education leads to external benefits because

Accepted Answer

A) the people who become better educated get better jobs. 
B) better educated people commit fewer crimes. 
C) better educated people are less lazy. 
D) little pollution is created when educating people. 
E) better educated people are more productive. 
A) the people who become better educated get better jobs. 
B) better educated people commit fewer crimes. 
C) better educated people are less lazy. 
D) little pollution is created when educating people. 
E) better educated people are more productive.

Question 11

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market?
I.Overproduction relative to the efficient level will occur.
Ii.The market price is less than the marginal social cost at the equilibrium quantity.
Iii.A deadweight loss occurs.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii

Question 12

Marginal social cost is equal to

Accepted Answer

A) the amount people who buy a product pay for another unit. 
B) whatever producers have to pay to produce output. 
C) the sum of marginal private cost and the marginal external cost. 
D) the average of marginal private cost and the marginal external cost. 
E) None of the above answers is correct. 
A) the amount people who buy a product pay for another unit. 
B) whatever producers have to pay to produce output. 
C) the sum of marginal private cost and the marginal external cost. 
D) the average of marginal private cost and the marginal external cost. 
E) None of the above answers is correct.

Question 13

Which of the following is the best example of a good or service with an external benefit?

Accepted Answer

A) gasoline 
B) education 
C) garbage disposal 
D) fertilizers 
E) bread 
A) gasoline 
B) education 
C) garbage disposal 
D) fertilizers 
E) bread

Question 14

If vouchers for a good or service given to consumers,then the supply curve ________ and the demand curve ________.

Accepted Answer

A) shifts leftward;shifts leftward 
B) shifts leftward;shifts rightward 
C) shifts rightward;shifts rightward 
D) does not shift;shifts rightward 
E) shifts rightward;does not shift 
A) shifts leftward;shifts leftward 
B) shifts leftward;shifts rightward 
C) shifts rightward;shifts rightward 
D) does not shift;shifts rightward 
E) shifts rightward;does not shift

Question 15

MSB equals

Accepted Answer

A) MC + the marginal external cost. 
B) MC + the marginal external benefit. 
C) MB + the marginal external cost. 
D) MB + the marginal external benefit. 
E) MB + MC. 
A) MC + the marginal external cost. 
B) MC + the marginal external benefit. 
C) MB + the marginal external cost. 
D) MB + the marginal external benefit. 
E) MB + MC.

Question 16

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is ________ because health care generates ________.

Accepted Answer

A) efficient;positive external benefits 
B) inefficient;positive external benefits 
C) inefficient;positive external costs 
D) efficient;positive external costs 
E) inefficient;public goods 
A) efficient;positive external benefits 
B) inefficient;positive external benefits 
C) inefficient;positive external costs 
D) efficient;positive external costs 
E) inefficient;public goods

Question 17

Discuss the difference between a private cost and a social cost.

Accepted Answer

A private cost is the cost of producing

Question 18

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

Accepted Answer

A) Coase theorem. 
B) property rights theorem. 
C) pollution rights theorem. 
D) emission rights theorem. 
E) private-market efficiency theorem. 
A) Coase theorem. 
B) property rights theorem. 
C) pollution rights theorem. 
D) emission rights theorem. 
E) private-market efficiency theorem.

Question 19

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people,the amount of the subsidy is ________ per person.

Accepted Answer

A) $25 
B) $50 
C) $35 
D) $15 
E) $40 
A) $25 
B) $50 
C) $35 
D) $15 
E) $40

Question 20

The figure above shows the demand for college education (D),the marginal social benefit of college education (MSB),and the marginal cost of the private schools (MC).
-The figure above shows that at the unregulated market equilibrium,marginal social benefit ________ marginal cost,and the number of students enrolled is ________.

Accepted Answer

A) exceeds;above the efficient quantity 
B) exceeds;below the efficient quantity 
C) is below;above the efficient quantity 
D) is below;below the efficient quantity 
E) equals;efficient 
A) exceeds;above the efficient quantity 
B) exceeds;below the efficient quantity 
C) is below;above the efficient quantity 
D) is below;below the efficient quantity 
E) equals;efficient

A marketable permit

Suppose two neighborhoods with 10 homes each in Buffalo,New York are identical except one of them is near a toxic waste dump.If homes near the dump sell for an average of $40,000 and the other homes sell for $90,000,the external cost of the dump is

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

Which of the following best describes an externality?

Which of the following is an example of an activity that creates an external cost? I.a smoker emitting second-hand smoke Ii.sulfur emitting from a smoke stack Iii.throwing garbage on the roadside

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

If producing a good or a service creates pollution,then

An external cost in the production of a good creates a difference between the I.costs borne by the producer and the costs borne by society in general. Ii.efficient quantity of output and the equilibrium quantity of output. Iii.marginal social cost and the marginal private cost.

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is units and the equilibrium price is per unit.

Education leads to external benefits because

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market? I.Overproduction relative to the efficient level will occur. Ii.The market price is less than the marginal social cost at the equilibrium quantity. Iii.A deadweight loss occurs.

Marginal social cost is equal to

Which of the following is the best example of a good or service with an external benefit?

If vouchers for a good or service given to consumers,then the supply curve and the demand curve .

MSB equals

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is because health care generates .

Discuss the difference between a private cost and a social cost.

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people,the amount of the subsidy is ________ per person.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 9: Externalities: Pollution, education, and Health Care

A marketable permit

Suppose two neighborhoods with 10 homes each in Buffalo,New York are identical except one of them is near a toxic waste dump.If homes near the dump sell for an average of $40,000 and the other homes sell for $90,000,the external cost of the dump is

-The figure above shows the market for college education.Left to itself without any government intervention,a competitive market would create a deadweight loss equal to

Which of the following best describes an externality?

Which of the following is an example of an activity that creates an external cost? I.a smoker emitting second-hand smoke Ii.sulfur emitting from a smoke stack Iii.throwing garbage on the roadside

-The figure above shows an education market in which the government is providing households with vouchers.In total,how much do the schools receive for a student?

If producing a good or a service creates pollution,then

An external cost in the production of a good creates a difference between the I.costs borne by the producer and the costs borne by society in general. Ii.efficient quantity of output and the equilibrium quantity of output. Iii.marginal social cost and the marginal private cost.

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

Education leads to external benefits because

When the production of a good has a marginal external cost,which of the following occurs in an unregulated market? I.Overproduction relative to the efficient level will occur. Ii.The market price is less than the marginal social cost at the equilibrium quantity. Iii.A deadweight loss occurs.

Marginal social cost is equal to

Which of the following is the best example of a good or service with an external benefit?

If vouchers for a good or service given to consumers,then the supply curve ________ and the demand curve ________.

MSB equals

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is ________ because health care generates ________.

Discuss the difference between a private cost and a social cost.

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a subsidy to providers of immunizations to immunize the efficient number of people,the amount of the subsidy is ________ per person.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is units and the equilibrium price is per unit.

If vouchers for a good or service given to consumers,then the supply curve and the demand curve .

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is because health care generates .