Question 1

An example of someone bearing the burden of a negative consumption externality would be

Accepted Answer

A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality. 
A)  Taylor living downwind from a feedlot. 
B)  LaShawn grows beautiful roses in her garden. 
C)  Jess's roommate smokes and she doesn't. 
D)  All of these are examples of someone bearing the burden of a negative consumption externality. 
E)  None of these is an example of someone bearing the burden of a negative consumption externality.

Question 2

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

Accepted Answer

A)  underproduction compared to the efficient level 
B)  overproduction compared to the efficient level 
C)  Production equals the efficient level. 
D)  Underproduction and overproduction are both possible depending on whether the external benefit is to consumption or production. 
E)  None of the above is correct. 
A)  underproduction compared to the efficient level 
B)  overproduction compared to the efficient level 
C)  Production equals the efficient level. 
D)  Underproduction and overproduction are both possible depending on whether the external benefit is to consumption or production. 
E)  None of the above is correct.

Question 3

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

Accepted Answer

A)  total private benefit. 
B)  net gain. 
C)  total external benefit. 
D)  marginal social benefit. 
E)  total Coase benefit. 
A)  total private benefit. 
B)  net gain. 
C)  total external benefit. 
D)  marginal social benefit. 
E)  total Coase benefit.

Question 4

If a good has an external cost,the

Accepted Answer

A)  unregulated competitive market outcome is efficient. 
B)  marginal private cost reflects the external cost. 
C)  unregulated competitive market outcome is inefficient. 
D)  marginal social benefit is equal to the marginal social cost when the market is in equilibrium. 
E)  external benefit must equal the external cost. 
A)  unregulated competitive market outcome is efficient. 
B)  marginal private cost reflects the external cost. 
C)  unregulated competitive market outcome is inefficient. 
D)  marginal social benefit is equal to the marginal social cost when the market is in equilibrium. 
E)  external benefit must equal the external cost.

Question 5

-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 price of private education is

Accepted Answer

A)  $12,000. 
B)  $16,000. 
C)  $20,000. 
D)  $4,000. 
E)  $6,000. 
A)  $12,000. 
B)  $16,000. 
C)  $20,000. 
D)  $4,000. 
E)  $6,000.

Question 6

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 7

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

Accepted Answer

The three methods are pollution limits,p

Question 8

For a firm,its labor costs are

Accepted Answer

A)  a marginal benefit. 
B)  a private cost. 
C)  an external cost. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct. 
A)  a marginal benefit. 
B)  a private cost. 
C)  an external cost. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct.

Question 9

-The figure shows the market for college education.If the market for education is competitive and with no government intervention,the equilibrium quantity of college students is ________ million and the efficient quantity of college students is ________ million.

Accepted Answer

A)  2; 4 
B)  8; 2 
C)  8; 4 
D)  4; 8 
E)  0; 10 
A)  2; 4 
B)  8; 2 
C)  8; 4 
D)  4; 8 
E)  0; 10

Question 10

If an external benefit is present,then the

Accepted Answer

A)  marginal private benefit curve lies above the marginal private cost curve. 
B)  marginal social benefit curve lies above the marginal private benefit curve. 
C)  marginal social cost curve lies above the marginal private benefit curve. 
D)  marginal social benefit is equal to the marginal social cost. 
E)  marginal social benefit curve is the same as the marginal private benefit curve. 
A)  marginal private benefit curve lies above the marginal private cost curve. 
B)  marginal social benefit curve lies above the marginal private benefit curve. 
C)  marginal social cost curve lies above the marginal private benefit curve. 
D)  marginal social benefit is equal to the marginal social cost. 
E)  marginal social benefit curve is the same as the marginal private benefit curve.

Question 11

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is ________ and the efficient number of students is ________.

Accepted Answer

A)  13 million students per year; 16 million students per year 
B)  14 million students per year; 16 million students per year 
C)  10 million students per year; 14 million students per year 
D)  10 million students per year; 13 million students per year 
E)  14 million students per year; 10 million students per year 
A)  13 million students per year; 16 million students per year 
B)  14 million students per year; 16 million students per year 
C)  10 million students per year; 14 million students per year 
D)  10 million students per year; 13 million students per year 
E)  14 million students per year; 10 million students per year

Question 12

If all education in the United States were provided by private,tuition-charging schools,

Accepted Answer

A)  too much education would be consumed. 
B)  too little education would be consumed. 
C)  the efficient level of education would be provided. 
D)  the government would provide both students and schools with vouchers. 
E)  education would no longer have an external benefit. 
A)  too much education would be consumed. 
B)  too little education would be consumed. 
C)  the efficient level of education would be provided. 
D)  the government would provide both students and schools with vouchers. 
E)  education would no longer have an external benefit.

Question 13

A competitive,unregulated market would

Accepted Answer

A)  produce too much pollution because pollution is an external cost. 
B)  produce too little education because education has an external benefit. 
C)  fail to achieve equilibrium if there are externalities present. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  produce too much pollution because pollution is an external cost. 
B)  produce too little education because education has an external benefit. 
C)  fail to achieve equilibrium if there are externalities present. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 14

Legally established titles to ownership,use,and disposal of factors of production and goods and services,are called ________ rights.

Accepted Answer

A)  government 
B)  pollution 
C)  property 
D)  inefficient 
E)  private 
A)  government 
B)  pollution 
C)  property 
D)  inefficient 
E)  private

Question 15

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

Accepted Answer

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

Question 16

-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 17

The marginal cost incurred by the entire society to produce a good or service is the

Accepted Answer

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

Question 18

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.If the government sets a pollution limit that achieves efficiency,how many tons of leather are produced?

Accepted Answer

A)  0 tons 
B)  200 tons 
C)  300 tons 
D)  more than 300 tons 
E)  more than 0 tons and less than 200 tons 
A)  0 tons 
B)  200 tons 
C)  300 tons 
D)  more than 300 tons 
E)  more than 0 tons and less than 200 tons

Question 19

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the market is competitive and unregulated,the equilibrium price is ________ per kilowatt hour and the equilibrium quantity is ________ billion kilowatt hours per day.

Accepted Answer

A)  10¢; 200 
B)  15¢; 150 
C)  20¢; 200 
D)  20¢; 100 
E)  7.5¢; 150 
A)  10¢; 200 
B)  15¢; 150 
C)  20¢; 200 
D)  20¢; 100 
E)  7.5¢; 150

Question 20

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

An example of someone bearing the burden of a negative consumption externality would be

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

If a good has an external cost,the

-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 price of private education is

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

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

For a firm,its labor costs are

-The figure shows the market for college education.If the market for education is competitive and with no government intervention,the equilibrium quantity of college students is million and the efficient quantity of college students is million.

If an external benefit is present,then the

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is and the efficient number of students is .

If all education in the United States were provided by private,tuition-charging schools,

A competitive,unregulated market would

Legally established titles to ownership,use,and disposal of factors of production and goods and services,are called ________ rights.

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

-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 .

The marginal cost incurred by the entire society to produce a good or service is the

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.If the government sets a pollution limit that achieves efficiency,how many tons of leather are produced?

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the market is competitive and unregulated,the equilibrium price is per kilowatt hour and the equilibrium quantity is billion kilowatt hours per day.

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.

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

An example of someone bearing the burden of a negative consumption externality would be

For a product with external benefits that is produced in a competitive,unregulated market,how can the resulting market output be described?

The sum of the marginal private benefit and the marginal external benefit derived from eco-tourism in British Columbia is called the

If a good has an external cost,the

-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 price of private education is

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

List and briefly define the three methods government can use to cope with an external cost,such as pollution.

For a firm,its labor costs are

-The figure shows the market for college education.If the market for education is competitive and with no government intervention,the equilibrium quantity of college students is ________ million and the efficient quantity of college students is ________ million.

If an external benefit is present,then the

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is ________ and the efficient number of students is ________.

If all education in the United States were provided by private,tuition-charging schools,

A competitive,unregulated market would

Legally established titles to ownership,use,and disposal of factors of production and goods and services,are called ________ rights.

When a person receives a flu vaccination,the ________ is the additional benefit the person receives from getting the shot.

-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 ________.

The marginal cost incurred by the entire society to produce a good or service is the

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.If the government sets a pollution limit that achieves efficiency,how many tons of leather are produced?

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.

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

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

-The figure shows the market for college education.If the market for education is competitive and with no government intervention,the equilibrium quantity of college students is million and the efficient quantity of college students is million.

-The figure above shows the market for college education in the United States.If the government does not intervene in this market,the number of students going to college is and the efficient number of students is .

-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 .