Question 1

-The figure above shows the costs and benefits associated with producing paper.What is the unregulated competitive market level of output?

Accepted Answer

A)  0 
B)  4 tons 
C)  6 tons 
D)  More than 6 tons 
E)  None of the above answers is correct. 
A)  0 
B)  4 tons 
C)  6 tons 
D)  More than 6 tons 
E)  None of the above answers is correct.

Question 2

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).
-Using the figure above,suppose education is provided by public colleges,where tuition is set at $10,000 a year.Then,________ million students are enrolled,and the taxpayers cover ________ of the marginal cost per student.

Accepted Answer

A)  15; $15,000 
B)  7.5; $5,000 
C)  3.5; none 
D)  15; $25,000 
E)  7.5; $15,000 
A)  15; $15,000 
B)  7.5; $5,000 
C)  3.5; none 
D)  15; $25,000 
E)  7.5; $15,000

Question 3

-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 deadweight loss equals

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 4

Which of the following is an example of an external cost?

Accepted Answer

A)  taxes 
B)  the price of a car wash 
C)  pollution 
D)  an electricity bill 
E)  paying a wage that exceeds the minimum wage 
A)  taxes 
B)  the price of a car wash 
C)  pollution 
D)  an electricity bill 
E)  paying a wage that exceeds the minimum wage

Question 5

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market,then the equilibrium tuition of college education is

Accepted Answer

A)  $13,000. 
B)  $16,000. 
C)  $20,000. 
D)  $7,000. 
E)  None of the above answers are correct. 
A)  $13,000. 
B)  $16,000. 
C)  $20,000. 
D)  $7,000. 
E)  None of the above answers are correct.

Question 6

Pollution is an example of a ________ externality.

Accepted Answer

A)  negative production 
B)  positive production 
C)  negative consumption 
D)  positive consumption 
E)  Coasian 
A)  negative production 
B)  positive production 
C)  negative consumption 
D)  positive consumption 
E)  Coasian

Question 7

A noisy party that keeps neighbors awake is an example of a

Accepted Answer

A)  negative production externality. 
B)  positive production externality. 
C)  negative consumption externality. 
D)  positive consumption externality. 
E)  Both answers B and C are correct. 
A)  negative production externality. 
B)  positive production externality. 
C)  negative consumption externality. 
D)  positive consumption externality. 
E)  Both answers B and C are correct.

Question 8

The marginal social cost of burning garbage in Houston is the sum of the marginal private cost and the marginal external cost." Is this assertion correct or incorrect?

Accepted Answer

The statement is correct.The m

Question 9

A payment made by the government to private producers of roads and libraries would be an example of

Accepted Answer

A)  a subsidy. 
B)  a copyright. 
C)  a voucher. 
D)  public provision. 
E)  a Coase payment. 
A)  a subsidy. 
B)  a copyright. 
C)  a voucher. 
D)  public provision. 
E)  a Coase payment.

Question 10

A government subsidy paid to a firm
i.increases the demand for the good.
ii.has no effect on the supply of the good.
iii.leads to an increase in the equilibrium quantity.

Accepted Answer

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

Question 11

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation,how many tons of leather will be produced?

Accepted Answer

A)  0 tons 
B)  200 tons 
C)  300 tons 
D)  more than 300 tons 
E)  None of the above answers is correct. 
A)  0 tons 
B)  200 tons 
C)  300 tons 
D)  more than 300 tons 
E)  None of the above answers is correct.

Question 12

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

Accepted Answer

A)  5 
B)  10 
C)  15 
D)  20 
E)  25 
A)  5 
B)  10 
C)  15 
D)  20 
E)  25

Question 13

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

Accepted Answer

A private subsidy increases the producti

Question 14

One reason why property rights help achieve an efficient level of pollution is because property rights

Accepted Answer

A)  force the marginal private cost to equal the marginal social cost. 
B)  force the marginal social cost to zero. 
C)  force the marginal external cost to a lower level than marginal private cost. 
D)  eliminate marginal private costs. 
E)  change the marginal external cost so that they are equal to the marginal social benefit. 
A)  force the marginal private cost to equal the marginal social cost. 
B)  force the marginal social cost to zero. 
C)  force the marginal external cost to a lower level than marginal private cost. 
D)  eliminate marginal private costs. 
E)  change the marginal external cost so that they are equal to the marginal social benefit.

Question 15

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

Accepted Answer

A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward. 
A)  The quantity supplied along the firm's supply curve increases. 
B)  The firm's demand curve shifts leftward. 
C)  The firm's supply curve shifts rightward. 
D)  The firm's supply curve shifts leftward. 
E)  Both the supply curve and the demand curve shift leftward.

Question 16

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

Accepted Answer

A)  ten cents 
B)  nineteen cents 
C)  four cents 
D)  zero cents 
E)  fourteen cents 
A)  ten cents 
B)  nineteen cents 
C)  four cents 
D)  zero cents 
E)  fourteen cents

Question 17

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of ________ and ________ million immunizations per year.

Accepted Answer

A)  $60; 14 
B)  $40; 14 
C)  $30; 14 
D)  $40; 22 
E)  None of the above answers are correct. 
A)  $60; 14 
B)  $40; 14 
C)  $30; 14 
D)  $40; 22 
E)  None of the above answers are correct.

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

A voucher is

Accepted Answer

A)  the production of a good by some public institution. 
B)  a payment that government makes to private producers. 
C)  a token that government provides to households to use in purchasing a specific good. 
D)  a permit to pollute. 
E)  a tax that is imposed on consumers rather than producers. 
A)  the production of a good by some public institution. 
B)  a payment that government makes to private producers. 
C)  a token that government provides to households to use in purchasing a specific good. 
D)  a permit to pollute. 
E)  a tax that is imposed on consumers rather than producers.

Question 20

Which of the following is true regarding pollution charges?
i.They force a polluter to pay a price for its pollution.
ii.They are based on the marginal external cost of pollution.
iii.The fee that produces the efficient amount of pollution is easily determined.

Accepted Answer

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

-The figure above shows the costs and benefits associated with producing paper.What is the unregulated competitive market level of output?

-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 deadweight loss equals

Which of the following is an example of an external cost?

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market,then the equilibrium tuition of college education is

Pollution is an example of a ________ externality.

A noisy party that keeps neighbors awake is an example of a

The marginal social cost of burning garbage in Houston is the sum of the marginal private cost and the marginal external cost." Is this assertion correct or incorrect?

A payment made by the government to private producers of roads and libraries would be an example of

A government subsidy paid to a firm i.increases the demand for the good. ii.has no effect on the supply of the good. iii.leads to an increase in the equilibrium quantity.

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation,how many tons of leather will be produced?

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

One reason why property rights help achieve an efficient level of pollution is because property rights

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of and million immunizations per year.

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

A voucher is

Which of the following is true regarding pollution charges? i.They force a polluter to pay a price for its pollution. ii.They are based on the marginal external cost of pollution. iii.The fee that produces the efficient amount of pollution is easily determined.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Externalities

-The figure above shows the costs and benefits associated with producing paper.What is the unregulated competitive market level of output?

-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 deadweight loss equals

Which of the following is an example of an external cost?

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market,then the equilibrium tuition of college education is

Pollution is an example of a ________ externality.

A noisy party that keeps neighbors awake is an example of a

The marginal social cost of burning garbage in Houston is the sum of the marginal private cost and the marginal external cost." Is this assertion correct or incorrect?

A payment made by the government to private producers of roads and libraries would be an example of

A government subsidy paid to a firm i.increases the demand for the good. ii.has no effect on the supply of the good. iii.leads to an increase in the equilibrium quantity.

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation,how many tons of leather will be produced?

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

One reason why property rights help achieve an efficient level of pollution is because property rights

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of ________ and ________ million immunizations per year.

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

A voucher is

Which of the following is true regarding pollution charges? i.They force a polluter to pay a price for its pollution. ii.They are based on the marginal external cost of pollution. iii.The fee that produces the efficient amount of pollution is easily determined.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows the market for annual influenza immunizations the United States.With no government intervention,the market equilibrium is at a price of and million immunizations per year.