Question 1

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 answer of The marginal social cost of burning garbage...

Question 2

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the marginal social benefit of private elementary education equaled the marginal social cost, the deadweight loss in Chicago's private education market would equal

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.

Question 3

In the figure above, when the market is unregulated and in equilibrium, marginal social cost ________ marginal benefit, and the quantity of chemical produced 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

Question 4

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a $10 subsidy to providers of immunizations, the number of people immunized is ________.

Accepted Answer

A) 20 million per year. 
B) exactly 10 million per year. 
C) between 15 and 20 million per year. 
D) less than 10 million per year. 
E) more than 10 million and less than 15 million.

Question 5

When Ronald takes another economics class, other people in society benefit.The benefit to these other people is called the marginal ________ benefit of the class.

Accepted Answer

A) social 
B) private 
C) external 
D) Coasian 
E) extra

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.If 5 concerts are put on, then the

Accepted Answer

A) marginal external cost will be greater than the marginal social cost. 
B) marginal external cost will be greater than the marginal private cost. 
C) marginal external cost will equal the marginal private cost. 
D) marginal social cost will equal the marginal external cost. 
E) marginal external cost will equal zero.

Question 7

The production of electricity creates pollution.When deciding how much electricity to buy, customers ________ the cost of pollution.When deciding how much electricity to buy, producers ________ the cost of pollution.

Accepted Answer

A) take into account; take into account 
B) do not take into account; do not take into account 
C) take into account; do not take into account 
D) do not take into account; take into account 
E) None of the above answers is correct.

Question 8

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is ________ because health care generates ________.

Accepted Answer

A) efficient; positive external benefits 
B) inefficient; positive external benefits 
C) inefficient; positive external costs 
D) efficient; positive external costs 
E) inefficient; public goods

Question 9

If transactions costs are low, then assigning property rights in a market with external costs
I∙increases the deadweight loss.
Ii∙means private transactions are efficient.
Iii∙means that only consumers must pay the external costs.

Accepted Answer

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

Question 10

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.

Question 11

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.If the marginal external cost is $10 per ton at every quantity of steel produced, the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

Accepted Answer

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

Question 12

-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

Question 13

-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

Accepted Answer

A) $24 million. 
B) $16 million. 
C) $8 million. 
D) more than $24 million. 
E) less than $8 million.

Question 14

Describe some of the external benefits associated with education.What can government do to encourage production of the efficient amount of education?

Accepted Answer

The answer of Describe some of the external benefits associated...

Question 15

-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.

Question 16

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

Accepted Answer

A) Taylor living downwind from a smelly feedlot where pigs are raised. 
B) Jess's roommate smokes and she doesn't. 
C) Lynna's neighbors play loud music late at night. 
D) All of these are examples of someone bearing the burden of a negative production externality. 
E) None of these is an examples of someone bearing the burden of a negative production externality.

Question 17

-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

The answer of 
-The above figure shows the market for...

Question 18

If the production of a good causes an external cost, then the efficient quantity is

Accepted Answer

A) equal to the quantity at which the marginal benefit equals marginal cost. 
B) less than the quantity at which the marginal benefit equals the marginal cost. 
C) more than the quantity at which the marginal benefit equals the marginal cost. 
D) the quantity at which the marginal private benefit is greater than the marginal social benefit. 
E) None of the above answers is correct.

Question 19

Which of the following is an example of a product that is made available through public provision?
I∙local police protection
Ii∙public schools
Iii∙local fire department

Accepted Answer

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

Question 20

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.

Exam 10: Externalities

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?

In the figure above, when the market is unregulated and in equilibrium, marginal social cost marginal benefit, and the quantity of chemical produced is .

-The figure above shows the market for annual influenza immunizations the United States.If the government intervenes in the market and provides a $10 subsidy to providers of immunizations, the number of people immunized is ________.

When Ronald takes another economics class, other people in society benefit.The benefit to these other people is called the marginal ________ benefit of the class.

-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.If 5 concerts are put on, then the

The production of electricity creates pollution.When deciding how much electricity to buy, customers the cost of pollution.When deciding how much electricity to buy, producers the cost of pollution.

-The figure above shows the market for annual influenza immunizations the United States.The market equilibrium with no government intervention is because health care generates .

If transactions costs are low, then assigning property rights in a market with external costs I∙increases the deadweight loss. Ii∙means private transactions are efficient. Iii∙means that only consumers must pay the external costs.