Question 1

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.

Question 2

A government subsidy

Accepted Answer

A)  is a policy that can be used to help eliminate the deadweight loss from an external cost.
B)  can help achieve an efficient amount of output when the good has an external benefit.
C)  increases consumers' marginal benefit from the good.
D)  Both answers A and C are correct.
E)  Both answers B and C are correct.

Question 3

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

Question 4

In a market with an external cost, government action

Accepted Answer

A)  cannot decrease the amount of the deadweight loss from the external cost.
B)  can sometimes help to achieve an efficient outcome.
C)  cannot alter firms' cost curves.
D)  Both answers A and C are correct.
E)  Both answers B and C are correct.

Question 5

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D, what distance represents the marginal external cost?

Accepted Answer

A)  AB
B)  BC
C)  CD
D)  BD
E)  None of the above answers is correct.

Question 6

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.

Question 7

For a product with an external cost, the supply curve

Accepted Answer

A)  represents the various quantities people can buy.
B)  is the same as the marginal private cost curve.
C)  is the same as the marginal social cost curve.
D)  is the same as the marginal external cost curve.
E)  is undefined.

Question 8

If the government provides a subsidy to producers, what is the effect of this policy in a supply and demand diagram?

Accepted Answer

A)  The demand curve shifts leftward and the price rises.
B)  The supply curve shifts rightward and the price falls.
C)  The supply curve shifts leftward and the price falls.
D)  The supply curve shifts leftward and the price rises.
E)  The demand curve shifts rightward and the price rises.

Question 9

-The figure above shows the market for college education.Left to itself without any government intervention, a competitive market would create a deadweight loss equal to

Accepted Answer

A)  zero.
B)  the area d.
C)  the area a + c.
D)  the area b + c.
E)  the area b + d.

Question 10

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

Question 11

If the government taxes producers that create pollution, the government's policy

Accepted Answer

A)  allows the producers to pollute more by increasing their costs.
B)  results in less production because the producers' costs have risen.
C)  eliminates pollution entirely by shifting the supply curve leftward.
D)  allows the firms to pass along higher costs but doesn't cut pollution.
E)  forbids the firms from passing along higher costs.

Question 12

To eliminate the inefficiency resulting from pollution that creates an external cost, the government can impose a pollution tax on producers that is equal to the

Accepted Answer

A)   MSB.
B)   MC.
C)   marginal external cost.
D)   MSC.
E)   price.

Question 13

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market, then the equilibrium tuition of college education is

Accepted Answer

A)  $13,000.
B)  $16,000.
C)  $20,000.
D)  $7,000.
E)  None of the above answers are correct.

Question 14

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 the supply side of the market and the demand side because they shift both the supply curve and the demand curve.

Question 15

What is the Coase theorem? What conditions need to be present for this theorem to work?

Accepted Answer

The Coase theorem states that if propert...

Question 16

-The figure above shows the market for annual influenza immunizations the United States.The marginal external benefit associated with immunizing 14 million people is ________ per person per year.

Accepted Answer

A)  $40
B)  $20
C)  $90
D)  $30
E)  $60

Question 17

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

Question 18

-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.

Question 19

Marginal social cost is equal to

Accepted Answer

A)  the amount people who buy a product pay for another unit.
B)  whatever producers have to pay to produce output.
C)  the sum of marginal private cost and the marginal external cost.
D)  the average of marginal private cost and the marginal external cost.
E)  None of the above answers is correct.

Question 20

If an external benefit is present in the consumption of a good or service, then

Accepted Answer

A)  there can be no external cost.
B)  the marginal social benefit is greater than the marginal private benefit.
C)  the marginal social benefit is equal to the marginal private benefit.
D)  the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
E)  the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.

Exam 10: Externalities

-The figure above shows the market for annual influenza immunizations the United States.The marginal external benefit associated with immunizing 14 million people is ________ per person per year.

Correct Answer
verified

Private subsidies granted to producers affect

Correct Answer
verified

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

Correct Answer
verified

To eliminate the inefficiency resulting from pollution that creates an external cost, the government can impose a pollution tax on producers that is equal to the

Correct Answer
verified

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

Correct Answer
verified

In a market with an external cost, government action

Correct Answer
verified

Marginal social cost is equal to

Correct Answer
verified

If the government taxes producers that create pollution, the government's policy

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

A government subsidy

Correct Answer
verified

For a product with an external cost, the supply curve

Correct Answer
verified

What is the Coase theorem? What conditions need to be present for this theorem to work?

Correct Answer
verified
The Coase theorem states that if propert...
View Answer

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market, then the equilibrium tuition of college education is

Correct Answer
verified

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D, what distance represents the marginal external cost?

Correct Answer
verified

Correct Answer
verified

-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

Correct Answer
verified

If an external benefit is present in the consumption of a good or service, then

Correct Answer
verified

If the government provides a subsidy to producers, what is the effect of this policy in a supply and demand diagram?

Correct Answer
verified

-The figure above shows the market for college education.Left to itself without any government intervention, a competitive market would create a deadweight loss equal to

Correct Answer
verified

Exam 10: Externalities

-The figure above shows the market for annual influenza immunizations the United States.The marginal external benefit associated with immunizing 14 million people is ________ per person per year.

Correct AnswerverifiedShow Answer

Private subsidies granted to producers affect

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To eliminate the inefficiency resulting from pollution that creates an external cost, the government can impose a pollution tax on producers that is equal to the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a market with an external cost, government action

Correct AnswerverifiedShow Answer

Marginal social cost is equal to

Correct AnswerverifiedShow Answer

If the government taxes producers that create pollution, the government's policy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A government subsidy

Correct AnswerverifiedShow Answer

For a product with an external cost, the supply curve

Correct AnswerverifiedShow Answer

What is the Coase theorem? What conditions need to be present for this theorem to work?

Correct AnswerverifiedThe Coase theorem states that if propert...View AnswerShow Answer

-The figure above shows the market for college education in the United States.If there is no external benefit from a college education and the government does not intervene in the market, then the equilibrium tuition of college education is

Correct AnswerverifiedShow Answer

-The figure above represents the relationship between output and cost in an industry with an external cost.When output is at D, what distance represents the marginal external cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-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

Correct AnswerverifiedShow Answer

If an external benefit is present in the consumption of a good or service, then

Correct AnswerverifiedShow Answer

If the government provides a subsidy to producers, what is the effect of this policy in a supply and demand diagram?

Correct AnswerverifiedShow Answer

-The figure above shows the market for college education.Left to itself without any government intervention, a competitive market would create a deadweight loss equal to

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The Coase theorem states that if propert...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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