ECON 332 Public Finance Ch 2

Points lying below a utility possibility curve are efficient. (T/F)

False

Positive economic analysis is based on underlying value judgments. (T/F)

False

The efficient annual output of any given good is attained if that good is made available in amounts up to the point at which the total social benefit of the good equals the total social cost. (T/F)

False

"The government should abolish tariffs to achieve efficiency" is a normative statement. (T/F)

True

Efficiency is attained when resources are used each year in such a way that no further net gain is possible. (T/F)

True

Efficient outcomes are often viewed as inequitable. (T/F)

True

Government programs can achieve efficiency when the gains to gainers from those policies exceed the losses to those who bear the costs. (T/F)

True

Government regulations that require airlines to serve routes for which the maximum price that pas¬sengers are willing to pay for a trip fall short of the minimum price that sellers are willing to accept are likely to cause losses in efficiency. (T/F)

True

If it is not possible to make someone better off without harming another, then resource allocation is efficient. (T/F)

True

If the marginal social benefit of smoke detectors exceeds its marginal social cost, then additional net gains are possible from an increased annual smoke detector production. (T/F)

True

If the marginal social cost of beer production exceeds its marginal social benefit, then more than the efficient amount of beer is being produced. (T/F)

True

It is possible for efficiency not to be attained even if all production is carried on without waste. (T/F)

True

Monopoly power causes losses in efficiency because the marginal social benefit of output exceeds its marginal social cost at the monopoly output. (T/F)

True

The normative approach to public finance prescribes certain actions to achieve predetermined criteria. (T/F)

True