Question 1

Public goods are not sold in efficient quantities in the marketplace because:

Accepted Answer

A)   once supplied to a buyer, they are made available at no cost to someone else.
B)   the more one person has, the less another person has.
C)   they are usually so costly that only the wealthy can afford them.
D)   of none of the above.E) B) and C)
F) A) and C)

Question 2

All of the following are examples of external cost EXCEPT:

Accepted Answer

A)   smoke nuisance of a factory.
B)   zoning restrictions on your property.
C)   land defilement from strip mining.
D)   weeds on your next-door neighbor's lawn.E) None of the above
F) C) and D)

Question 3

In the context of public goods and government efforts to correct market failure, economists may tend to be critical of the Endangered Species Act because:

Accepted Answer

A)   economists don't generally care about the environment.
B)   species have no economic value.
C)   the Act eliminates many activities that would contribute to the total output of the economy.
D)   the Act does not generally provide for a weighing of the costs and the benefits of species preservation.E) B) and D)
F) A) and B)

Question 4

-(Exhibit: Markets and Efficiency)  What is the marginal cost of an extra pound of apples to a producer in Panel(a) ?

Accepted Answer

A)   It is the value that must be given up to produce an extra pound of apples.
B)   It is greater than the price.
C)   It must be less than the price.
D)   It is the cost of the least satisfactory apples.E) A) and B)
F) A) and C)

Question 5

MC; MB 
-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)  In Panel (b)  at activity level E, _______ , and in Panel (c)  at activity level J, _______ .

Accepted Answer

A)   MB 
B)   MB > MC; MB 
C)   net benefit is ABGF; net benefit is ABC.
D)   there is no deadweight loss; deadweight loss is CHIE) C) and D)
F) A) and B)

Question 6

A private good is a good or service for which exclusion:

Accepted Answer

A)   is possible and for which marginal cost of an additional user is zero.
B)   is possible and for which marginal cost of an additional user is positive.
C)   cannot be applied and for which marginal cost of an additional user is zero.
D)   cannot be applied and for which marginal cost of an additional user is positive.E) A) and D)
F) None of the above

Question 7

A set of rules that specify the ways in which the resource for which they are defined may be used are:

Accepted Answer

A)   public goods.
B)   quasi-public goods.
C)   property rights.
D)   free-rider rights.E) A) and C)
F) None of the above

Question 8

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)  In Panel (a) , the maximum net benefit is shown:

Accepted Answer

A)   where the level of activity is at D.
B)   by the intersection of MB and MC.
C)   by the area of triangle ABC.
D)   in all of the above cases.E) All of the above
F) A) and C)

Question 9

Activities of consumers and firms:

Accepted Answer

A)   have benefits but not costs.
B)   have costs but not benefits.
C)   have both costs and benefits.
D)   are too complex to be analyzed with economic theory.E) None of the above
F) C) and D)

Question 10

If the marginal benefit received from a good is less than the marginal cost of production, then:

Accepted Answer

A)   society's well-being can be improved if production increases.
B)   society's well-being can be improved if production decreases.
C)   society's well-being cannot be improved by changing production.
D)   the market is producing too little of the good.E) A) and B)
F) A) and C)

Question 11

-(Exhibit: Surplus and Demand)  The amount by which the total benefits to consumers exceeds their total expenditure is called _______ and is depicted at quantity OE by the area _______ .

Accepted Answer

A)   producer surplus; BCD
B)   consumer surplus; OCDE
C)   consumer surplus; BCD
D)   net benefit; OBDEE) None of the above
F) B) and C)

Question 12

The _______ is the amount by which an additional unit of an activity increases its total benefit.

Accepted Answer

A)   average benefit
B)   net benefit
C)   marginal benefit
D)   top benefitE) B) and D)
F) A) and C)

Question 13

For markets to operate efficiently, it is necessary that private marginal cost:

Accepted Answer

A)   be equal to output quantity.
B)   equal the cost of output.
C)   plus external cost be equal to output price.
D)   minus external cost be equal to output price.E) A) and C)
F) B) and C)

Question 14

If an activity generates external costs, the decisionmakers generating the activity will:

Accepted Answer

A)   be faced with its full costs.
B)   be faced with no costs.
C)   not be faced with its full costs.
D)   be faced with excesive costs.E) B) and C)
F) A) and D)

Question 15

The total benefit of an activity minus its total cost is:

Accepted Answer

A)   net benefit.
B)   marginal benefit.
C)   marginal cost.
D)   utility.E) C) and D)
F) A) and C)

Question 16

Which of the following is not a public good?

Accepted Answer

A)   flood control provision
B)   police protection
C)   a lighthouse
D)   postal servicesE) All of the above
F) B) and D)

Question 17

An industry with external costs produces:

Accepted Answer

A)   a quantity of output that is the socially ideal quantity.
B)   a smaller quantity of output than the socially ideal quantity.
C)   a larger quantity of output than the socially ideal quantity.
D)   the socially ideal quantity of output if a specific subsidy is given to buyers.E) B) and C)
F) All of the above

Question 18

A characteristic of public goods is that:

Accepted Answer

A)   people pay for them in proportion to the benefits received.
B)   the costs of producing them are less than if they were private goods.
C)   their benefits cannot be withheld from anyone, regardless of whether the person pays for them.
D)   they are produced only by the public sector, not by the private sector.E) A) and C)
F) C) and D)

Question 19

(Exhibit: Marginal Benefits and Marginal Costs)  In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. At 4 hours of study the student will "maximize" because:

Accepted Answer

A)   MB = MC.
B)   MB = 20 and MC = 20.
C)   the difference between total benefits and total costs is maximized.
D)   of all of the above.E) C) and D)
F) None of the above

Exam 6: Consumer Choices

(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. At 4 hours of study the student will "maximize" because:

Correct Answer
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A private good is a good or service for which exclusion:

Correct Answer
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-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a) , the maximum net benefit is shown:

Correct Answer
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If an activity generates external costs, the decisionmakers generating the activity will:

Correct Answer
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A characteristic of public goods is that:

Correct Answer
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An industry with external costs produces:

Correct Answer
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Which of the following is not a public good?

Correct Answer
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For markets to operate efficiently, it is necessary that private marginal cost:

Correct Answer
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The _______ is the amount by which an additional unit of an activity increases its total benefit.

Correct Answer
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Activities of consumers and firms:

Correct Answer
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All of the following are examples of external cost EXCEPT:

Correct Answer
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In the context of public goods and government efforts to correct market failure, economists may tend to be critical of the Endangered Species Act because:

Correct Answer
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-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b) at activity level E, _ , and in Panel (c) at activity level J, _ .

Correct Answer
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-(Exhibit: Surplus and Demand) The amount by which the total benefits to consumers exceeds their total expenditure is called _ and is depicted at quantity OE by the area _ .

Correct Answer
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Public goods are not sold in efficient quantities in the marketplace because:

Correct Answer
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If the marginal benefit received from a good is less than the marginal cost of production, then:

Correct Answer
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A set of rules that specify the ways in which the resource for which they are defined may be used are:

Correct Answer
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The total benefit of an activity minus its total cost is:

Correct Answer
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-(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a) ?

Correct Answer
verified

Exam 6: Consumer Choices

(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. At 4 hours of study the student will "maximize" because:

Correct AnswerverifiedShow Answer

A private good is a good or service for which exclusion:

Correct AnswerverifiedShow Answer

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a) , the maximum net benefit is shown:

Correct AnswerverifiedShow Answer

If an activity generates external costs, the decisionmakers generating the activity will:

Correct AnswerverifiedShow Answer

A characteristic of public goods is that:

Correct AnswerverifiedShow Answer

An industry with external costs produces:

Correct AnswerverifiedShow Answer

Which of the following is not a public good?

Correct AnswerverifiedShow Answer

For markets to operate efficiently, it is necessary that private marginal cost:

Correct AnswerverifiedShow Answer

The _______ is the amount by which an additional unit of an activity increases its total benefit.

Correct AnswerverifiedShow Answer

Activities of consumers and firms:

Correct AnswerverifiedShow Answer

All of the following are examples of external cost EXCEPT:

Correct AnswerverifiedShow Answer

In the context of public goods and government efforts to correct market failure, economists may tend to be critical of the Endangered Species Act because:

Correct AnswerverifiedShow Answer

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b) at activity level E, _______ , and in Panel (c) at activity level J, _______ .

Correct AnswerverifiedShow Answer

-(Exhibit: Surplus and Demand) The amount by which the total benefits to consumers exceeds their total expenditure is called _______ and is depicted at quantity OE by the area _______ .

Correct AnswerverifiedShow Answer

Public goods are not sold in efficient quantities in the marketplace because:

Correct AnswerverifiedShow Answer

If the marginal benefit received from a good is less than the marginal cost of production, then:

Correct AnswerverifiedShow Answer

A set of rules that specify the ways in which the resource for which they are defined may be used are:

Correct AnswerverifiedShow Answer

The total benefit of an activity minus its total cost is:

Correct AnswerverifiedShow Answer

-(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a) ?

Correct AnswerverifiedShow Answer

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-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b) at activity level E, _ , and in Panel (c) at activity level J, _ .

Correct Answer
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-(Exhibit: Surplus and Demand) The amount by which the total benefits to consumers exceeds their total expenditure is called _ and is depicted at quantity OE by the area _ .

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