Question 1

Cap-and-trade refers to

Accepted Answer

A) capping emissions and issuing tradeable emissions permits. 
B) capping revenue from selling emissions permits. 
C) countries trading fishing rights in international waters. 
D) capping taxes on firms that engage in international trade. 
E) capping the benefits gained from pollution controls. 
A) capping emissions and issuing tradeable emissions permits. 
B) capping revenue from selling emissions permits. 
C) countries trading fishing rights in international waters. 
D) capping taxes on firms that engage in international trade. 
E) capping the benefits gained from pollution controls.

Question 2

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

Accepted Answer

A) inefficient. 
B) efficient. 
C) inequitable. 
D) illegal. 
E) unnecessary. 
A) inefficient. 
B) efficient. 
C) inequitable. 
D) illegal. 
E) unnecessary.

Question 3

The difference between private cost and social cost is that

Accepted Answer

A) social cost only considers the external cost borne by society. 
B) social cost only considers the cost borne by people other than the producer. 
C) private cost only considers the cost borne by producers of the good. 
D) social cost also includes any external benefit whereas private cost excludes all external benefits. 
E) There is no difference;the terms refer to the same cost. 
A) social cost only considers the external cost borne by society. 
B) social cost only considers the cost borne by people other than the producer. 
C) private cost only considers the cost borne by producers of the good. 
D) social cost also includes any external benefit whereas private cost excludes all external benefits. 
E) There is no difference;the terms refer to the same cost.

Question 4

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the marginal social benefit of private elementary education equaled the marginal social cost,the deadweight loss in Chicago's private education market would equal

Accepted Answer

A) 0. 
B) $800,000. 
C) $1,600,000. 
D) more than $1,600,000. 
E) more than $800,000 and less than $1,600,000. 
A) 0. 
B) $800,000. 
C) $1,600,000. 
D) more than $1,600,000. 
E) more than $800,000 and less than $1,600,000.

Question 5

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

Accepted Answer

A) 0¢ per kilowatt. 
B) 10¢ per kilowatt. 
C) 20¢ per kilowatt. 
D) 15¢ per kilowatt. 
E) 5¢ per kilowatt. 
A) 0¢ per kilowatt. 
B) 10¢ per kilowatt. 
C) 20¢ per kilowatt. 
D) 15¢ per kilowatt. 
E) 5¢ per kilowatt.

Question 6

When Keisha receives a flu vaccination,the additional benefit enjoyed by Keisha's friends is the

Accepted Answer

A) marginal private benefit. 
B) marginal external benefit. 
C) marginal social benefit. 
D) private benefit. 
E) marginal private cost. 
A) marginal private benefit. 
B) marginal external benefit. 
C) marginal social benefit. 
D) private benefit. 
E) marginal private cost.

Question 7

The deadweight loss associated with producing a product that has an external cost occurs because

Accepted Answer

A) too much output is produced. 
B) too little output is produced. 
C) the price that firms charge for the good is too high. 
D) not enough resources are allocated to producing the good. 
E) the marginal social cost does not equal zero. 
A) too much output is produced. 
B) too little output is produced. 
C) the price that firms charge for the good is too high. 
D) not enough resources are allocated to producing the good. 
E) the marginal social cost does not equal zero.

Question 8

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D,what distance represents the marginal external cost?

Accepted Answer

A) AB 
B) BC 
C) CD 
D) BD 
E) None of the above answers is correct. 
A) AB 
B) BC 
C) CD 
D) BD 
E) None of the above answers is correct.

Question 9

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

Accepted Answer

A) $0.18 
B) $0.10 
C) $0.08 
D) $0.02 
E) $0.80 
A) $0.18 
B) $0.10 
C) $0.08 
D) $0.02 
E) $0.80

Question 10

Which of the following equations is correct?

Accepted Answer

A) MC = MSC + marginal external cost 
B) MSC = MC ÷ marginal external cost 
C) MSC = MC + marginal external cost 
D) MSC = MC × marginal external cost 
E) MC = marginal external cost - MSC 
A) MC = MSC + marginal external cost 
B) MSC = MC ÷ marginal external cost 
C) MSC = MC + marginal external cost 
D) MSC = MC × marginal external cost 
E) MC = marginal external cost - MSC

Question 11

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

Accepted Answer

A) $16,000 
B) $13,000 
C) $11,000 
D) $5,000 
E) $7,000 
A) $16,000 
B) $13,000 
C) $11,000 
D) $5,000 
E) $7,000

Question 12

Vouchers given to consumers

Accepted Answer

A) increase the demand for a good. 
B) decrease the demand for a good. 
C) increase the supply of a good. 
D) decrease the supply of a good. 
E) increase both the demand for the good and the supply of the good. 
A) increase the demand for a good. 
B) decrease the demand for a good. 
C) increase the supply of a good. 
D) decrease the supply of a good. 
E) increase both the demand for the good and the supply of the good.

Question 13

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

Accepted Answer

The equilibrium quantity of coal burned

Question 14

In a market with an external cost,government action

Accepted Answer

A) cannot decrease the amount of the deadweight loss from the external cost. 
B) can sometimes help to achieve an efficient outcome. 
C) cannot alter firms' cost curves. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) cannot decrease the amount of the deadweight loss from the external cost. 
B) can sometimes help to achieve an efficient outcome. 
C) cannot alter firms' cost curves. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 15

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the equilibrium number of students being privately educated is

Accepted Answer

A) 0 students. 
B) 200 students. 
C) 400 students. 
D) 600 students. 
E) None of the above answers is correct. 
A) 0 students. 
B) 200 students. 
C) 400 students. 
D) 600 students. 
E) None of the above answers is correct.

Question 16

A government subsidy

Accepted Answer

A) is a policy that can be used to help eliminate the deadweight loss from an external cost. 
B) can help achieve an efficient amount of output when the good has an external benefit. 
C) increases consumers' marginal benefit from the good. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) is a policy that can be used to help eliminate the deadweight loss from an external cost. 
B) can help achieve an efficient amount of output when the good has an external benefit. 
C) increases consumers' marginal benefit from the good. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 17

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 100 billion kilowatt hours are produced is

Accepted Answer

A) 5¢ per kilowatt. 
B) 10¢ per kilowatt. 
C) 15¢ per kilowatt. 
D) 20¢ per kilowatt. 
E) 0¢ per kilowatt. 
A) 5¢ per kilowatt. 
B) 10¢ per kilowatt. 
C) 15¢ per kilowatt. 
D) 20¢ per kilowatt. 
E) 0¢ per kilowatt.

Question 18

A problem with pollution charges or taxes as a solution to pollution is that

Accepted Answer

A) people don't want the government to regulate industry. 
B) the necessary information about the polluting industry is costly and usually unavailable. 
C) taxes are already too high. 
D) pollution would still continue. 
E) the producers do not want the property right to their pollution. 
A) people don't want the government to regulate industry. 
B) the necessary information about the polluting industry is costly and usually unavailable. 
C) taxes are already too high. 
D) pollution would still continue. 
E) the producers do not want the property right to their pollution.

Question 19

-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 of ________ units is inefficient because ________.

Accepted Answer

A) 8;marginal benefit exceeds marginal cost 
B) 8;marginal cost exceeds marginal benefit 
C) 10;marginal cost exceeds marginal benefit 
D) 10;marginal social benefit exceeds marginal benefit 
E) 10;marginal external benefit exceeds marginal social benefit 
A) 8;marginal benefit exceeds marginal cost 
B) 8;marginal cost exceeds marginal benefit 
C) 10;marginal cost exceeds marginal benefit 
D) 10;marginal social benefit exceeds marginal benefit 
E) 10;marginal external benefit exceeds marginal social benefit

Question 20

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is incorrect.Edu

Cap-and-trade refers to

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

The difference between private cost and social cost is that

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

When Keisha receives a flu vaccination,the additional benefit enjoyed by Keisha's friends is the

The deadweight loss associated with producing a product that has an external cost occurs because

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D,what distance represents the marginal external cost?

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

Which of the following equations is correct?

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

Vouchers given to consumers

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

In a market with an external cost,government action

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the equilibrium number of students being privately educated is

A government subsidy

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 100 billion kilowatt hours are produced is

A problem with pollution charges or taxes as a solution to pollution is that

-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 of units is inefficient because .

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

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

Cap-and-trade refers to

The Coase theorem is the proposition that if property rights exist and are enforced,private transactions are

The difference between private cost and social cost is that

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

When Keisha receives a flu vaccination,the additional benefit enjoyed by Keisha's friends is the

The deadweight loss associated with producing a product that has an external cost occurs because

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D,what distance represents the marginal external cost?

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?

Which of the following equations is correct?

-The figure above shows the market for college education in the United States.The marginal external benefit associated with educating 14 million students is ________ per student per year.

Vouchers given to consumers

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention,is the equilibrium quantity of coal burned equal to,more than,or less than the efficient quantity?

In a market with an external cost,government action

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the equilibrium number of students being privately educated is

A government subsidy

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 100 billion kilowatt hours are produced is

A problem with pollution charges or taxes as a solution to pollution is that

-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 of ________ units is inefficient because ________.

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

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 of units is inefficient because .