Question 1

If there is no external cost,then marginal social cost

Accepted Answer

A)  increases as output increases. 
B)  decreases as output increases. 
C)  is constant regardless of the level of output. 
D)  is unrelated to output levels. 
E)  first increases and then decreases as output increases. 
A)  increases as output increases. 
B)  decreases as output increases. 
C)  is constant regardless of the level of output. 
D)  is unrelated to output levels. 
E)  first increases and then decreases as output increases.

Question 2

Suppose two neighborhoods (A andB)have identical housing,but neighborhood A has a strictly enforced deed restriction that prohibits homeowners from parking junk cars in the front yard.If houses in neighborhood A sell for $105,000 and houses in neighborhood B sell for $100,000,how would an economist value the external cost of visible junk cars,per house?

Accepted Answer

A)  $205,000 
B)  $105,000 
C)  $100,000 
D)  $5,000 
E)  None of the above answers is correct. 
A)  $205,000 
B)  $105,000 
C)  $100,000 
D)  $5,000 
E)  None of the above answers is correct.

Question 3

-The above figure shows the market for fertilizer.When fertilizer is applied to lawns,it runs off into neighboring streams and ponds,killing fish and creating an external cost.
a.What is the equilibrium price and quantity of fertilizer in an unregulated,competitive market
b.What is the efficient quantity of fertilizer
c.Suppose government imposes a tax equal to the marginal external cost.What is the equilibrium price paid by consumers and the equilibrium quantity after implementation of the tax
d.At the output level in part (c),how much is the tax
e.How much tax revenue does government collect
f.What is the deadweight loss borne by society if the externality is left uncorrected

Accepted Answer

a.The equilibrium price is $1,000 a ton

Question 4

-The figure above shows the market for college education in the United States.If the government provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy per student equals ________ and each student pays ________ per year.

Accepted Answer

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

Question 5

"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

Question 6

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

Accepted Answer

A)  marginal external cost equals $30,000. 
B)  marginal social cost equals $30,000. 
C)  marginal external cost equals the marginal private cost. 
D)  marginal external cost equals $40,000. 
E)  marginal external cost equals $10,000. 
A)  marginal external cost equals $30,000. 
B)  marginal social cost equals $30,000. 
C)  marginal external cost equals the marginal private cost. 
D)  marginal external cost equals $40,000. 
E)  marginal external cost equals $10,000.

Question 7

If tuition at a college is $30,000 and the external benefit of graduating from this college is $10,000,then
i.in the absence of any government intervention,the number of students graduating is less than the efficient number.
ii.the government could increase the number of graduates by giving the college a $10,000 subsidy per student.
iii.the government could increase the number of graduates by giving the students $10,000 vouchers.

Accepted Answer

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

Question 8

A example of a good with external benefits is

Accepted Answer

A)  a pizza. 
B)  a dose of flu vaccine. 
C)  a sewing machine. 
D)  an imported good. 
E)  a pair of running shoes. 
A)  a pizza. 
B)  a dose of flu vaccine. 
C)  a sewing machine. 
D)  an imported good. 
E)  a pair of running shoes.

Question 9

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

Accepted Answer

A)  $640 million 
B)  $320 million 
C)  $240 million 
D)  more than $640 million 
E)  zero, because the government has taxed the firms out of business. 
A)  $640 million 
B)  $320 million 
C)  $240 million 
D)  more than $640 million 
E)  zero, because the government has taxed the firms out of business.

Question 10

-The figure above shows the market for college education in the United States.If the government intervenes in the market and provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy equals ________ per student.

Accepted Answer

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

Question 11

Transactions costs are the

Accepted Answer

A)  costs of using the Coase theorem. 
B)  opportunity costs of conducting a transaction. 
C)  external marginal costs of the externality. 
D)  reason why taxes cannot affect the inefficiency resulting from an external cost. 
E)  external costs when a firm pollutes. 
A)  costs of using the Coase theorem. 
B)  opportunity costs of conducting a transaction. 
C)  external marginal costs of the externality. 
D)  reason why taxes cannot affect the inefficiency resulting from an external cost. 
E)  external costs when a firm pollutes.

Question 12

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

Accepted Answer

A)  exceed; above the efficient quantity 
B)  exceed; below the efficient quantity 
C)  be below; above the efficient quantity 
D)  be below; below the efficient quantity 
E)  equal; efficient 
A)  exceed; above the efficient quantity 
B)  exceed; below the efficient quantity 
C)  be below; above the efficient quantity 
D)  be below; below the efficient quantity 
E)  equal; efficient

Question 13

-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 quantity is ________ billion kilowatt hours per day and the efficient quantity is ________ billion kilowatt hours per day

Accepted Answer

A)  150; 200 
B)  200; 150 
C)  0; 150 
D)  250; 0 
E)  150; 150 
A)  150; 200 
B)  200; 150 
C)  0; 150 
D)  250; 0 
E)  150; 150

Question 14

When using pollution charges to improve efficiency in a market with an external cost,regulators attempt to set the pollution charge equal to the

Accepted Answer

A)  marginal social cost of production. 
B)  marginal external cost of production. 
C)  marginal private cost of production. 
D)  marginal private benefit of consumption. 
E)  marginal external benefit minus the marginal external cost. 
A)  marginal social cost of production. 
B)  marginal external cost of production. 
C)  marginal private cost of production. 
D)  marginal private benefit of consumption. 
E)  marginal external benefit minus the marginal external cost.

Question 15

-The above figure shows the market for college education in the United States.With no government intervention,the market equilibrium is at a tuition of ________ and ________ million students per year.

Accepted Answer

A)  16,000; 14 
B)  $20,000; 10 
C)  $13,000; 10 
D)  $13,000; 17 
E)  $16,000; 10 
A)  16,000; 14 
B)  $20,000; 10 
C)  $13,000; 10 
D)  $13,000; 17 
E)  $16,000; 10

Question 16

External benefits are the extra

Accepted Answer

A)  benefits a consumer gets from consuming a good. 
B)  costs a producer creates in producing a good. 
C)  benefits that accrue to people other than the consumers. 
D)  costs a producer bears for producing a polluting good. 
E)  benefits a producer obtains for reducing production of a polluting good. 
A)  benefits a consumer gets from consuming a good. 
B)  costs a producer creates in producing a good. 
C)  benefits that accrue to people other than the consumers. 
D)  costs a producer bears for producing a polluting good. 
E)  benefits a producer obtains for reducing production of a polluting good.

Question 17

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

Accepted Answer

A)  $30. 
B)  $20. 
C)  $40. 
D)  $60. 
E)  $70. 
A)  $30. 
B)  $20. 
C)  $40. 
D)  $60. 
E)  $70.

Question 18

When the government uses a private subsidy in a market with an external benefit,to reach the efficient quantity of production,the subsidy must be equal to the marginal

Accepted Answer

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

Question 19

When studying pollution and the environment,economists

Accepted Answer

A)  have no role to play. 
B)  concentrate on the physical aspects of the environment. 
C)  emphasize costs and benefits. 
D)  attempt to reduce pollution at all costs. 
E)  think pollution is good if it occurs when production takes place. 
A)  have no role to play. 
B)  concentrate on the physical aspects of the environment. 
C)  emphasize costs and benefits. 
D)  attempt to reduce pollution at all costs. 
E)  think pollution is good if it occurs when production takes place.

Question 20

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

Accepted Answer

A)  $100 
B)  $150 
C)  $250 
D)  $300 
E)  $50 
A)  $100 
B)  $150 
C)  $250 
D)  $300 
E)  $50

If there is no external cost,then marginal social cost

-The figure above shows the market for college education in the United States.If the government provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy per student equals and each student pays per year.

"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.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

A example of a good with external benefits is

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

-The figure above shows the market for college education in the United States.If the government intervenes in the market and provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy equals ________ per student.

Transactions costs are the

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would marginal benefit,and the quantity of chemical produced would be .

-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 quantity is billion kilowatt hours per day and the efficient quantity is billion kilowatt hours per day

When using pollution charges to improve efficiency in a market with an external cost,regulators attempt to set the pollution charge equal to the

-The above figure shows the market for college education in the United States.With no government intervention,the market equilibrium is at a tuition of and million students per year.

External benefits are the extra

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

When the government uses a private subsidy in a market with an external benefit,to reach the efficient quantity of production,the subsidy must be equal to the marginal

When studying pollution and the environment,economists

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

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

If there is no external cost,then marginal social cost

-The figure above shows the market for college education in the United States.If the government provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy per student equals ________ and each student pays ________ per year.

"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.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.Suppose the marginal private cost of the 5th concert is $10,000.Then,for the 5th concert,the

A example of a good with external benefits is

-The figure above shows the market for the chemical hydrogen sulfide,the production of which creates an external cost.The government imposes the pollution tax shown in the figure.How much tax revenue does the government collect?

-The figure above shows the market for college education in the United States.If the government intervenes in the market and provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy equals ________ per student.

Transactions costs are the

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

When using pollution charges to improve efficiency in a market with an external cost,regulators attempt to set the pollution charge equal to the

-The above figure shows the market for college education in the United States.With no government intervention,the market equilibrium is at a tuition of ________ and ________ million students per year.

External benefits are the extra

-The figure above shows the market for annual influenza immunizations the United States.If there is NO external benefit from health care and the government does not intervene in the market,then the equilibrium price of immunizations is

When the government uses a private subsidy in a market with an external benefit,to reach the efficient quantity of production,the subsidy must be equal to the marginal

When studying pollution and the environment,economists

-The figure above shows the market for a good with an external benefit.If the government wants to grant a subsidy so that the efficient quantity is produced,the subsidy must equal ________ per unit.

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 college education in the United States.If the government provides a subsidy to colleges to enroll the efficient number of students,the amount of the subsidy per student equals and each student pays per year.

Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would marginal benefit,and the quantity of chemical produced would be .

-The above figure shows the market for college education in the United States.With no government intervention,the market equilibrium is at a tuition of and million students per year.