Question 1

The use of vouchers for education

Accepted Answer

A)  decreases the demand for education and increases the equilibrium quantity. 
B)  increases the demand for education and increases the equilibrium quantity. 
C)  increases the deadweight loss for those who can't afford schooling. 
D)  decreases the quantity provided to the efficient level. 
E)  decreases the demand for education and decreases the equilibrium quantity. 
A)  decreases the demand for education and increases the equilibrium quantity. 
B)  increases the demand for education and increases the equilibrium quantity. 
C)  increases the deadweight loss for those who can't afford schooling. 
D)  decreases the quantity provided to the efficient level. 
E)  decreases the demand for education and decreases the equilibrium quantity.

Question 2

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  None of the above answers is correct. 
A)  $4,000 
B)  $8,000 
C)  $12,000 
D)  $16,000 
E)  None of the above answers is correct.

Question 3

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

Accepted Answer

A)  a negative benefit. 
B)  a public choice impact. 
C)  a positive externality. 
D)  a negative externality. 
E)  a private good. 
A)  a negative benefit. 
B)  a public choice impact. 
C)  a positive externality. 
D)  a negative externality. 
E)  a private good.

Question 4

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).
-In the figure above,suppose the government provides vouchers worth $15,000 per student per year.When the market is in 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

Question 5

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 6

-The figure above shows the costs and benefits associated with producing paper.What is the efficient 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 7

"According to the Coase theorem,if Gabriel wants the local television station to cease having helicopters fly over his house at night,he will be more likely to be able to reach an agreement with the station if the property right to the airspace is clearly defined and the transaction costs of negotiating are high." Is this statement true or false? Explain your answer.

Accepted Answer

The statement is false.The first part of

Question 8

The Coase theorem states that

Accepted Answer

A)  the level of pollution should be equal to zero to maximize social net benefit. 
B)  profit making producers pollute because they are forced to. 
C)  the efficient level of output is where marginal external cost equals marginal external benefit. 
D)  if property rights exist and transactions costs are low, private transactions are efficient. 
E)  the best way to limit pollution is by taxing producers who pollute. 
A)  the level of pollution should be equal to zero to maximize social net benefit. 
B)  profit making producers pollute because they are forced to. 
C)  the efficient level of output is where marginal external cost equals marginal external benefit. 
D)  if property rights exist and transactions costs are low, private transactions are efficient. 
E)  the best way to limit pollution is by taxing producers who pollute.

Question 9

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 10

-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 11

If a government action is designed to achieve efficiency,then the action must have the market produce the amount of output so that the

Accepted Answer

A)  marginal private cost equals the marginal private benefit. 
B)  marginal social cost equals the marginal social benefit. 
C)  marginal external cost equals the marginal external benefit. 
D)  marginal private cost equals the tax. 
E)  marginal social benefit exceeds the marginal social cost by as much as possible. 
A)  marginal private cost equals the marginal private benefit. 
B)  marginal social cost equals the marginal social benefit. 
C)  marginal external cost equals the marginal external benefit. 
D)  marginal private cost equals the tax. 
E)  marginal social benefit exceeds the marginal social cost by as much as possible.

Question 12

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 13

-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 14

Legally established titles to the ownership,use,and disposal of factors of production are referred to as

Accepted Answer

A)  property rights. 
B)  Coase rights. 
C)  pollution rights. 
D)  emission rights. 
E)  price-setting rights. 
A)  property rights. 
B)  Coase rights. 
C)  pollution rights. 
D)  emission rights. 
E)  price-setting rights.

Question 15

When property rights are assigned and transactions costs are low,

Accepted Answer

A)  all costs and benefits are taken into account by the transacting parties so the transaction is efficient. 
B)  externalities will result in market failure. 
C)  the marginal social benefit curve shifts leftward and the marginal social cost curve does not shift. 
D)  the marginal social cost curve shifts rightward and the marginal social benefit curve does not shift. 
E)  the marginal social cost curve shifts rightward and the marginal social benefit curve also shifts rightward. 
A)  all costs and benefits are taken into account by the transacting parties so the transaction is efficient. 
B)  externalities will result in market failure. 
C)  the marginal social benefit curve shifts leftward and the marginal social cost curve does not shift. 
D)  the marginal social cost curve shifts rightward and the marginal social benefit curve does not shift. 
E)  the marginal social cost curve shifts rightward and the marginal social benefit curve also shifts rightward.

Question 16

-The table above gives the marginal social cost (which equals the price),marginal private benefit,and marginal social benefit of students attending Diablo Valley College (DVC)in Concord,California.
a.When 4,500 students attend DVC,what does the marginal external benefit equal?
b.If the market is competitive and left without government intervention,what is the quantity of students that will attend DVC and what will be the price of a course?
c.What is the efficient quantity of students attending DVC?
d.If the government can set the price per course,in order to have the efficient quantity of students attending DVC,what should the government set as the price?

Accepted Answer

a.The marginal external benefit equals $

Question 17

-The figure above shows the market for annual influenza immunizations the United States.The efficient quantity of immunizations is

Accepted Answer

A)  14 million per year. 
B)  10 million per year. 
C)  between 14 and 21 million per year. 
D)  less than 10 million per year. 
E)  22 million per year. 
A)  14 million per year. 
B)  10 million per year. 
C)  between 14 and 21 million per year. 
D)  less than 10 million per year. 
E)  22 million per year.

Question 18

When people decide whether or not to get a flu vaccination,they ignore the ________ and as a result ________.

Accepted Answer

A)  marginal private benefit; too few vaccinations are given 
B)  external benefit; too few vaccinations are given 
C)  private cost; too many vaccinations are given 
D)  marginal external cost; vouchers must be provided 
E)  social cost; too many vaccinations are given 
A)  marginal private benefit; too few vaccinations are given 
B)  external benefit; too few vaccinations are given 
C)  private cost; too many vaccinations are given 
D)  marginal external cost; vouchers must be provided 
E)  social cost; too many vaccinations are given

Question 19

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

Accepted Answer

A)  total deadweight loss when there is not the illustrated subsidy. 
B)  remaining deadweight loss when there is the illustrated subsidy. 
C)  gain in efficiency from the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  consumer surplus with the illustrated subsidy. 
A)  total deadweight loss when there is not the illustrated subsidy. 
B)  remaining deadweight loss when there is the illustrated subsidy. 
C)  gain in efficiency from the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  consumer surplus with the illustrated subsidy.

Question 20

Three methods the government can use to cope with the external cost from pollution are

Accepted Answer

A)  pollution taxes, subsidies, and outright bans. 
B)  pollution taxes, regulations, and subsidies. 
C)  marketable permits, pollution subsidies, and pollution taxes. 
D)  pollution charges, marketable permits, and pollution limits. 
E)  vouchers, pollution subsidies, and pollution taxes. 
A)  pollution taxes, subsidies, and outright bans. 
B)  pollution taxes, regulations, and subsidies. 
C)  marketable permits, pollution subsidies, and pollution taxes. 
D)  pollution charges, marketable permits, and pollution limits. 
E)  vouchers, pollution subsidies, and pollution taxes.

The use of vouchers for education

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

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?

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

The Coase theorem states that

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

-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.

If a government action is designed to achieve efficiency,then the action must have the market produce the amount of output so that the

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

-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.

Legally established titles to the ownership,use,and disposal of factors of production are referred to as

When property rights are assigned and transactions costs are low,

-The figure above shows the market for annual influenza immunizations the United States.The efficient quantity of immunizations is

When people decide whether or not to get a flu vaccination,they ignore the and as a result .

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

Three methods the government can use to cope with the external cost from pollution are

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 use of vouchers for education

-The figure above shows an education market in which the government is providing households with vouchers.What is the dollar value of a voucher in this market?

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

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?

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

The Coase theorem states that

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

-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.

If a government action is designed to achieve efficiency,then the action must have the market produce the amount of output so that the

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

-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.

Legally established titles to the ownership,use,and disposal of factors of production are referred to as

When property rights are assigned and transactions costs are low,

-The figure above shows the market for annual influenza immunizations the United States.The efficient quantity of immunizations is

When people decide whether or not to get a flu vaccination,they ignore the ________ and as a result ________.

-The figure above shows the market for annual influenza immunizations the United States.Area A is the

Three methods the government can use to cope with the external cost from pollution are

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

When people decide whether or not to get a flu vaccination,they ignore the and as a result .