12,13,14

_______________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process. a. Social costs b. Private costs c. Market costs d. External costs

a. Social Costs

If a glass manufacturer has only a few ________________ of reducing pollutants, it will ____________________ . a. costly ways; end up paying the pollution tax. b. inexpensive ways; incur the pollution tax instead. c. costly ways; do so to minimize its pollution taxes. d. inexpensive ways; buy the most expensive technology.

a. costly ways; end up paying the pollution tax.

Ideally, a patent should cover a long enough period of time for the inventor to _______________, but that period should not be so long that it allows the inventor to _____________________________. a. earn a hearty return; charge a high monopoly price permanently b. contribute to the social interest; only receive a slice of the social benefits c. earn a rate of return; prevent broad public access to classic works d. contribute to the social interest; prevent broad public access to inventions

a. earn a hearty return; charge a high monopoly price permanently

An economist is more likely to identify __________________ as a more efficient and flexible way for society to __________________________ . a. marketable permits; allow a limited, declining amount of pollution to occur b. better defined property rights; to address issues of allowable levels of pollution c. market-oriented environmental tools; enforce strict limits on emissions d. better defined property rights; to shrink pollution levels over time

a. marketable permits; allow a limited, declining amount of pollution to occur

When a firm invests in new technology, the ________________ that the firm receives are _____________________________ . a. private benefits; only a portion of the overall social benefits b. social benefits; only a portion of the overall private benefits c. private benefits; about three-quarters of the economic benefits d. social benefits; about one-third of the overall private benefits

a. private benefits; only a portion of the overall social benefits

If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would a. shift to the left. b. shift to the right. c. decrease substantially. d. increase slightly.

a. shift to the left.

Market competition may sometimes encourage a firm to innovate out of fear because of the perception that a. they will inevitably fall behind other competitors seeking out innovations. b. the firm will only have a very temporary edge over its competitors. c. the ability to earn above-normal profits is also available to its competition. d. higher profits can only be earned by finding less expensive ways to produce.

a. they will inevitably fall behind other competitors seeking out innovations.

Bruce is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Bruce works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. With this policy in place, if Bruce works 600 hours, his income will be a. $3,600 b. $16,440 c. $15,000 d. $12,840

b. $16,440

Bringing the nations of the world to act together in addressing environmental issues that spill over national borders requires _______________ between countries with _________________ . a. a different approach to negotiations; similar income levels and sets of priorities b. a difficult set of negotiations; different income levels and sets of priorities c. a different approach to negotiations; low and middle-income levels. d. deliberate negotiations; high-income levels and similar sets of priorities.

b. a difficult set of negotiations; different income levels and sets of priorities

Which of the following is the most appropriate response of public policy to a negative externality like pollution? a. modernize, update, and restore homes in run down neighborhoods to decrease littering b. find ways to account for the social costs of the negative externality in economic decisions c. encourage high standards of public education to increase innovation capability of youth d. assist the private party creating the negative externality to receive more social benefits

b. find ways to account for the social costs of the negative externality in economic decisions

Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the _____________________ and the __________________ . a. marginal benefits are least; marginal costs are greatest b. marginal benefits are greatest; marginal costs are least c. environmental benefits are greatest; social costs are least d. social costs are greatest; environmental benefits are least

b. marginal benefits are greatest; marginal costs are least

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is a. nonrivalrous and excludable b. rivalrous and nonexcludable c. nonrivalrous and nonexcludable d. rivalrous and excludable

b. rivalrous and nonexcludable

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is a. the cost of the bee hives to the beekeeper. b. the possibility of the bees stinging the students at the school. c. the bees helping to pollinate the orchard, leading to more fruit. d. the honey the bees produce.

b. the possibility of the bees stinging the students at the school.

On average, it can cost _____________ and take ___________ to discover a new drug, perform the necessary safety tests, and bring the drug to market. a. $500 million; five years b. $100 million; a year c. $800 million; more than a decade d. $300 million; less than a decade

c. $800 million; more than a decade

______________ allows the government to collect wealth for redistribution based on the amount of stored wealth that is being passed on in the form of an inheritance. a. An inheritance tax b. A redistribution tax c. An estate tax d. A death tax

c. An estate tax

When making decisions about what safety systems should be required in cars or airplanes, the ___________________ will only approve rules where the estimated cost per life saved is __________ or less. a. U.S. Senate; $5 million b. U.S. Congress; $2 million c. Environmental Protection Agency; $3 million d. Environmental Regulation Agency; $7 million

c. Environmental Protection Agency; $3 million

Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If Wisconsin does not clean the lake and Illinois does then the payoffs will be a. Wisconsin gains 200, Illinois gains 100 b. Wisconsin gains 200, Illinois loses 100 c. Wisconsin gains 300, Illinois loses 100 d. Wisconsin gains 300, Illinois gains 100

c. Wisconsin gains 300, Illinois loses 100

Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits. a. remains outside the transaction b incurs the costs outside the production process c. fails to allocate resources d. efficiently d. avoids externalities

c. fails to allocate resources efficiently

A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ . a. left quintile; right quintile b. right quintile; left quintile c. horizontal axis; vertical axis d. vertical axis; horizontal axis

c. horizontal axis; vertical axis

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, a. it will enjoy a small temporary advantage over the competition. b. it would be able to set price to compensate for development costs. c. it could sell the new computers as a monopoly for at least a few years. d. it would receive a government bailout if losses could drive it out of business.

c. it could sell the new computers as a monopoly for at least a few years.

Which of the following would be classified as a positive externality? a. a surcharge for ambulance service is shifted to property taxes b. reselling outdated textbooks to under-funded public schools c. removing government education subsidies for public schools d. converting a derelict empty lot to a public vegetable garden

d. converting a derelict empty lot to a public vegetable garden

Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers. a. increase, decrease b. increase, increase c. decrease, decrease d. decrease, increase

d. decrease, increase

Crystal is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Crystal's labor-leisure opportunity set a. has doubled b. is smaller with the government support program c. is not affected by the government support program d. is larger with the government support program

d. is larger with the government support program

Two rubber companies, Boing and Twang, are currently producing along, and polluting, the same river. Both companies are considering whether to install pollution filters on their factories. These filters cost $15 million each. If a filter is installed, there is a benefit of $20 million, but this benefit is divided equally between the two companies. In the absence of any government intervention or agreement between the firms, a. both firms will install filters b. Boing will install a filter, Twang will not c. Twang will install a filter, Boing will not d. neither firm will install a filter

d. neither firm will install a filter

Property rights are the legal rights of ownership on which others are a. allowed to infringe by paying the property owner's pollution tax. b. able to enforce use of pollution-control technologies. c. able to specify allowable quantities of pollution. d. not allowed to infringe without paying compensation.

d. not allowed to infringe without paying compensation.

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use? a. a tax imposed on the value of inheritances b. redistribution from those with high incomes to those with low incomes c. trying to assure that a ladder of opportunity is widely available d. the three mains sets of tools it can use include all of the above

d. the three mains sets of tools it can use include all of the above

Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? a. to help inventors earn higher rates of return b. to help inventors earn reasonable returns c. to encourage a stream of inventions that monetarily benefit the inventor. d. to encourage a stream of invention that benefits the whole of society.

d. to encourage a stream of invention that benefits the whole of society.

Why did inequality of household income increase in the United States in recent decades? a. growth of single-parent families at the top end of the income distribution b. higher-earner couples near the top end of the income distribution c. increase in earnings received by high-skilled labor relative to low-skilled labor d. demand for high-skilled labor at higher wages increased

demand for high-skilled labor at higher wages increased

A public good is a good that is ____________________ , and thus is difficult for market producers to sell to individual consumers. a. excludable or rivalrous b. nonexcludable and nonrivalrous c. excludable and rivalrous d. unexcludable or unrivaled

b. nonexcludable and nonrivalrous