Question 1

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

Accepted Answer

A)  only a private cost. 
B)  only an external cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because the neighbors get to hear the band. 
A)  only a private cost. 
B)  only an external cost. 
C)  both a private cost and an external cost. 
D)  neither a private cost nor an external cost. 
E)  a private benefit because the neighbors get to hear the band.

Question 2

-The figure above shows the marginal social cost of generating electricity and the marginal private cost.For 4 billion kilowatts,what is the marginal external cost?

Accepted Answer

A)  $0.12 
B)  $0.08 
C)  $0.04 
D)  $0.00 
E)  $0.20 
A)  $0.12 
B)  $0.08 
C)  $0.04 
D)  $0.00 
E)  $0.20

Question 3

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism,the destruction of the trails is an example of

Accepted Answer

A)  an external cost. 
B)  a private cost. 
C)  a government cost. 
D)  an external benefit. 
E)  None of the above answers is correct. 
A)  an external cost. 
B)  a private cost. 
C)  a government cost. 
D)  an external benefit. 
E)  None of the above answers is correct.

Question 4

The benefit that Joan gets from eating cherries is an example of

Accepted Answer

A)  when the external benefit equals the private benefit. 
B)  a private benefit. 
C)  an external benefit. 
D)  an external cost. 
E)  the marginal social cost of eating cherries. 
A)  when the external benefit equals the private benefit. 
B)  a private benefit. 
C)  an external benefit. 
D)  an external cost. 
E)  the marginal social cost of eating cherries.

Question 5

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the deadweight loss equals ________ per year.

Accepted Answer

A)  $28 billion 
B)  $14 billion 
C)  $280 billion 
D)  $224 billion 
E)  $7 billion 
A)  $28 billion 
B)  $14 billion 
C)  $280 billion 
D)  $224 billion 
E)  $7 billion

Question 6

Explain why a producer who is causing external costs does not have the incentive to reduce these costs.

Accepted Answer

The answer lies in the fact that the cos

Question 7

In the figure above,if a pollution tax is imposed that is equal to the marginal external cost of pollution,then when the market is in equilibrium,the deadweight loss is ________ per month.

Accepted Answer

A)  $250 thousand 
B)  $125 thousand 
C)  $150 thousand 
D)  $50 thousand 
E)  zero 
A)  $250 thousand 
B)  $125 thousand 
C)  $150 thousand 
D)  $50 thousand 
E)  zero

Question 8

For a good whose production creates an external cost,the efficient quantity of output is

Accepted Answer

A)  where the market demand curve and the market supply curve intersect. 
B)  where the marginal social cost curve and marginal benefit curve intersect. 
C)  as low as possible. 
D)  zero. 
E)  the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible. 
A)  where the market demand curve and the market supply curve intersect. 
B)  where the marginal social cost curve and marginal benefit curve intersect. 
C)  as low as possible. 
D)  zero. 
E)  the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible.

Question 9

The production of paper creates pollution,an external cost.What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

Accepted Answer

When the government imposes a tax equal

Question 10

Which of the following government actions is appropriate in a market with an external benefit?

Accepted Answer

A)  taxes 
B)  vouchers 
C)  marketable permits 
D)  setting a tax equal to the transactions costs 
E)  price ceiling 
A)  taxes 
B)  vouchers 
C)  marketable permits 
D)  setting a tax equal to the transactions costs 
E)  price ceiling

Question 11

Pell grants are money given to students attending college.Pell grants are most closely similar to

Accepted Answer

A)  public provision of a good. 
B)  private subsidies given to producers of a good. 
C)  vouchers given to consumers of a good. 
D)  property rights assigned to consumers of a good. 
E)  a subsidy given to the producer of a good. 
A)  public provision of a good. 
B)  private subsidies given to producers of a good. 
C)  vouchers given to consumers of a good. 
D)  property rights assigned to consumers of a good. 
E)  a subsidy given to the producer of a good.

Question 12

Externalities

Accepted Answer

A)  can be either benefits or costs. 
B)  always create extra social costs. 
C)  always make society better off. 
D)  cannot be expressed in dollar amounts. 
E)  are always part of private costs or private benefits. 
A)  can be either benefits or costs. 
B)  always create extra social costs. 
C)  always make society better off. 
D)  cannot be expressed in dollar amounts. 
E)  are always part of private costs or private benefits.

Question 13

Private subsidies granted to producers affect

Accepted Answer

A)  the supply side of the market by shifting the supply curve. 
B)  the demand side of the market by shifting the demand curve. 
C)  property rights. 
D)  transaction costs. 
E)  both the supply side of the market and the demand side because they shift both the supply curve and the demand curve. 
A)  the supply side of the market by shifting the supply curve. 
B)  the demand side of the market by shifting the demand curve. 
C)  property rights. 
D)  transaction costs. 
E)  both the supply side of the market and the demand side because they shift both the supply curve and the demand curve.

Question 14

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a voucher of ________ per student.

Accepted Answer

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

Question 15

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $0 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  $0

Question 16

The benefit the consumer of a good or service receives is the

Accepted Answer

A)  social benefit. 
B)  external benefit. 
C)  private benefit. 
D)  public benefit. 
E)  consumption benefit. 
A)  social benefit. 
B)  external benefit. 
C)  private benefit. 
D)  public benefit. 
E)  consumption benefit.

Question 17

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

Accepted Answer

A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons. 
A)  0 gallons. 
B)  5 million gallons. 
C)  10 million gallons. 
D)  20 million gallons. 
E)  15 million gallons.

Question 18

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

Accepted Answer

A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined

Question 19

Cost effective technologies to reduce pollution are most likely to result from

Accepted Answer

A)  marketable pollution permits. 
B)  pollution charges. 
C)  taxes. 
D)  pollution limits. 
E)  quotas. 
A)  marketable pollution permits. 
B)  pollution charges. 
C)  taxes. 
D)  pollution limits. 
E)  quotas.

Question 20

-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.

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-The figure above shows the marginal social cost of generating electricity and the marginal private cost.For 4 billion kilowatts,what is the marginal external cost?

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism,the destruction of the trails is an example of

The benefit that Joan gets from eating cherries is an example of

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the deadweight loss equals ________ per year.

Explain why a producer who is causing external costs does not have the incentive to reduce these costs.

In the figure above,if a pollution tax is imposed that is equal to the marginal external cost of pollution,then when the market is in equilibrium,the deadweight loss is ________ per month.

For a good whose production creates an external cost,the efficient quantity of output is

The production of paper creates pollution,an external cost.What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

Which of the following government actions is appropriate in a market with an external benefit?

Pell grants are money given to students attending college.Pell grants are most closely similar to

Externalities

Private subsidies granted to producers affect

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a voucher of ________ per student.

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

The benefit the consumer of a good or service receives is the

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

Cost effective technologies to reduce pollution are most likely to result from

-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

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

A loud band plays a concert late at night in a neighborhood park.The noise produced by the band that keeps the neighbors not attending the concert awake is

-The figure above shows the marginal social cost of generating electricity and the marginal private cost.For 4 billion kilowatts,what is the marginal external cost?

When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism,the destruction of the trails is an example of

The benefit that Joan gets from eating cherries is an example of

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the deadweight loss equals ________ per year.

Explain why a producer who is causing external costs does not have the incentive to reduce these costs.

In the figure above,if a pollution tax is imposed that is equal to the marginal external cost of pollution,then when the market is in equilibrium,the deadweight loss is ________ per month.

For a good whose production creates an external cost,the efficient quantity of output is

The production of paper creates pollution,an external cost.What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

Which of the following government actions is appropriate in a market with an external benefit?

Pell grants are money given to students attending college.Pell grants are most closely similar to

Externalities

Private subsidies granted to producers affect

-The figure shows the market for college education.In order for the efficient amount of education to occur,the government could provide a voucher of ________ per student.

-The figure above shows an education market in which the government is providing households with vouchers.Excluding the voucher,what do the students pay the schools?

The benefit the consumer of a good or service receives is the

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If this market is left unregulated and no pollution tax is imposed,the equilibrium quantity of gasoline is

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

Cost effective technologies to reduce pollution are most likely to result from

-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

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