Econ Micro #8 (study) (exam 3)
_____________ costs involve the costs in terms of time, energy, and resources associated with searching out, negotiating, and completing a transaction.
transaction
The benefit enjoyed by a third party that is not directly involved in the production or consumption of a good or service is called: Multiple choice question. a. a negative externality. b. a positive externality. c. marginal benefit. d. marginal cost. e. an externality
b,
Social supply is Multiple choice question. a. the supply of a good or service that reflects the private costs of its production. b. the supply of a good or service that reflects both the private and external costs of its production. c. the supply of a good or service that reflects external costs of its production.
b.
The exclusive right to determine how a resource is used Multiple choice question. a. involves market failures. b. refers to property rights. c. does not involves land or capital. d. only occurs in command economies.
b.
When goods and services are nonrivalrous, the ________ of a good or service by one person does not change the quantity available for consumption by others.
consumption
The marginal _______ of preventing pollution is the opportunity cost of the dollars spent.
cost
A market failure occurs when Multiple choice question. a. some consumers are unable to purchase a good or service due to its high price. b. property rights are well-defined. c. the cost of producing a good or service exceeds the price for which it sells. d. the market does not produce an output level that maximizes total surplus.
d.
According to the Coase Theorem if a property right is well defined and transaction costs are low Multiple choice question. a. resources will gravitate to their lowest-valued use. b. where the resources are used depends on who owns the property right. c. total surplus is not maximized. d. resources will gravitate to their highest-valued use.
d.
An externality is: Multiple choice question. a. the benefit enjoyed or cost imposed due to the production or consumption of a good or service without any consequences to a third party. b. all benefits or costs involved in the production or consumption of a good or service. c. the benefit or cost expected by a third party directly involved in the production or consumption of a good or service. d. the benefit enjoyed by or cost imposed on a third party not directly involved in the production or consumption of a good or service.
d.
If some people can be prevented or excluded from consuming a good or service then that good or service is called: Multiple choice question. a. nonexcludable. b. rivalrous c. nonrivalrous. d. excludable
d.
If the marginal cost of a pollution prevention program exceeds the marginal benefit of the program Multiple choice question. a. the optimal level of pollution is maintained. b. total welfare is maximized. c. the program will proceed. d. the program will not proceed.
d.
The high cost of a pollution reduction program that increases access to cleaner water and reduces airborne industrial waste from factories could be offset by Multiple choice question. a. the increase in health-care expenses due to cleaner air. b. the overall profit experienced by government. c. the cost reduction associated with pollution abatement. d. the reduction in health-care expenses due to cleaner air.
d.
The marginal benefit of preventing pollution is Multiple choice question. a. the total revenue generated by the cleanup project. b. the opportunity cost of the dollars spent. c. always greater than the marginal cost. d. measured in terms of reduced health expenses and improved living standards.
d.
The uncompensated cost of an activity that is imposed on a third party is called Multiple choice question. a. marginal cost b. negative cost c. a positive externality d. a negative externality
d.
When people consume a nonexcludable good without paying for it it is called Multiple choice question. a. the nonexcludability problem. b. the public good problem. c. the tragedy of the commons. d. the free-rider problem.
d.
_________ occur when property rights are not clearly defined. Multiple choice question. a. Profits b. Shortages c. Surpluses d.Externalities
d.
When goods and services are rivalrous, the consumption of a good or service by one person ________ the quantity available for consumption by others.
diminishes
In general, the optimal level of pollution to either prevent or to clean up occurs where the marginal benefit of preventing pollution _______ (one word) the marginal cost of preventing pollution.
equals
When people can be prevented or excluded from consuming a good or service, that good or service is said to be __________
excludable
Markets characterized by either positive or negative ___________ may result in an inefficient outcome.
externalities
The benefit enjoyed by or cost imposed on a third party that is not directly involved in the production or consumption of a good or service is called a(n) ______
externalities
A negative ____________ is the uncompensated cost of an activity that is imposed on a third party.
externality
The benefit enjoyed by or cost imposed on a third party that is not directly involved in the production or consumption of a good or service is called a(n) ___________.
externality
When people consume a nonexcludable good without paying for it, it is called the ____________ - ____________ problem.
free rider
One of the justifications for __________ intervention in markets is the potential to improve on the market outcome in markets characterized by externalities
government
When a positive externality exists, the socially optimal level of output will be ________ than that resulting from a private market.
greater
Many of the goods that are taxed by the government, such as cigarettes, gasoline, and alcohol generate _____________ externalities.
negative
When a ___________ externality exists, the socially optimal level of output will be less than that resulting from a private market.
negative
When a ________ externality exists, the socially optimal level of output will be less than that resulting from a _____________
negative, private
When a firm lacks the ability to prevent people from consuming a good or service, the good is called a _________ good.
nonexcludable
When the consumption of a good or service by one person does not change the quantity available for consumption by others, the characteristic of the public good we are talking about is ___________.
nonrival
When a ____________ externality exists, the socially optimal level of output will be greater than that resulting from a ____________ market.
positive, private
___________ demand is the demand for a good or service that considers only the private benefits of its consumption.
private
Social demand is the demand for a good or service that reflects both the ______ and ________ benefits of its consumption.
private, external
Social supply is the supply of a good or service that reflects both the _______ and ________ costs of its production.
private, public
The market interaction between buyers and sellers results in __________ and ___________ efficiency.
productive and allocative
When there is _________ and __________ efficiency, the market produces the right goods in the correct amounts using the fewest resources possible.
productive, allocative
__________ rights involve the exclusive right to determine how a resource is used.
property
The costs and benefits of how a resource is used may not be properly considered when are not __________ _____________ clearly defined.
property rights
Any good or service that is nonrivalrous and nonexcludable is a ______ good.
public
Governments can provide _________ goods because they have the ability to force people to _______ for a good or service by collecting taxes.
public, pay
A private company cannot provide_________ goods because it does not have the ability to force people to pay for a good or service by collecting __________ .
public, tax
When the consumption of a good or service by one person reduces the quantity available for consumption by others, the goods and services with this characteristic are _______ goods.
rival
________ demand is the demand for a good or service that reflects both the private and external benefits of its consumption.
social
_________ supply is the supply of a good or service that reflects both the private and external costs of its production.
social
The supply of a good or service that reflects only the private costs of its production is called Multiple choice question. a. private supply b. social supply c. external costs d. the demand of a good or service that reflects both the private and external costs of its production.
a,
A property right is a. the exclusive right to determine how a resource is used. b. a resource into the production of goods and services. c. something that only occurs in command economies. d. exists when the market fails to produce the level of output that maximizes surplus.
a.
Ceteris paribus, what do you expect to happen to the equilibrium quantity of pollution prevented if the marginal benefit of pollution prevention decreases? Multiple choice question. a. Equilibrium quantity decreases. b. Equilibrium quantity does not change. c. Equilibrium quantity increases. d. Equilibrium quantity is indeterminate.
a.
If property rights are clearly defined can the economy still experience externalities? Multiple choice question. a. Yes. Transaction costs could be significant. b. No. The economy reaches equilibrium. c. Yes. The economy could experience scarcity. d. No. Clearly-defined property rights eliminates scarcity.
a.
If the marginal benefit of pollution increases, what happens to the equilibrium quantity of pollution? Multiple choice question. a. Equilibrium quantity of pollution increases. b. Equilibrium quantity of pollution does not change. c. Equilibrium quantity of pollution decreases.
a.
In general, the optimal level of pollution to either prevent or to clean up occurs where Multiple choice question. a. the marginal benefit of preventing pollution equals the marginal cost of preventing pollution. b. the total benefit of preventing pollution equals the marginal costs of preventing pollution. c. the marginal benefit of preventing pollution is less than the marginal cost of preventing pollution. d. the marginal benefit of preventing pollution exceeds the marginal cost of preventing pollution.
a.
Private markets fail to provide the optimal amount of ____________ because they are non rival and non excludable. Multiple choice question. a. public goods b. private goods c. artificially scarce goods d. common resources
a.
Private markets fail to provide the optimal amount of some goods such as public firework displays because: Multiple choice question. a. private companies will have difficulty getting anybody to pay for them. b. these displays are dangerous and private companies do not want the risk. c. private companies cannot get permission to put on these displays. c. the competition would drive them out of business.
a.
Private supply is Multiple choice question. a. the supply of a good or service that reflects only the private costs of its production. b. the demand of a good or service that reflects both the private and external costs of its production. c. the supply of a good or service that reflects only the private costs of its consumption. d. the supply of a good or service that reflects both the private and external costs of its production.
a.
The benefit enjoyed by or cost imposed on a third party that is not directly involved in the production or consumption of a good or service is called: Multiple choice question. a. an externality. b. a positive externality. c. marginal cost. d. a negative externality. e. marginal benefit.
a.
The unpaid benefit of an activity that is enjoyed by a third party is called Multiple choice question. a. a positive externality b. marginal benefit c. marginal cost. d. a negative externality
a.
When some people cannot be prevented or excluded from consuming a good or service, that good or service is said to be: Multiple choice question. a. nonexcludable. b. excludable. c. rivalrous. d. nonrivalrous.
a.
When the market does not produce an output level that maximizes total surplus it is called a Multiple choice question. a. market failure b. shortage c. property right. d. scarce resource
a.
Which of the following is most likely considered an economic bad? Multiple choice question. a. Nuclear waste b. Professional football c. Brussels sprouts d. Organic lawn care
a.
__________ involve(s) the costs in terms of time energy and resources associated with searching out negotiating and completing a transaction. Multiple choice question. a. Transaction costs b. The Coase Theorem c. Property rights d. Market failures
a.
Two groups have different uses for a local field. A bird watching society enjoys studying the ground-nesting swallows that visit each summer. A mountain bike camp prefers to use the field to build jumps and hold other events and receives a benefit of $1,000 from using the field. When it does, the activities scare away the birds and the bird-watching society faces a wealth reduction of $700. What is the optimal use of the field during the summers? Multiple choice question. a. the mountain bike camp using the field to hold events b. Bird watchers using the field to study ground-nesting swallows c. Depends on who has property rights d. Cannot be determined because of insufficient information
a/
Two groups have different uses for a local field. A bird watching society enjoys studying the ground-nesting swallows that visit each summer. A mountain bike camp prefers to use the field to build jumps and hold other events and receives a benefit of $1000 from using the field. When it does the activities scare away the birds and the bird-watching society faces a wealth reduction of $700. If the mountain bike camp owns the rights, will they hold events? Multiple choice question. a. Yes. Although it is their right they will have to pay the birdwatchers $300 to use it. b. Yes. It is their right and this right is more valuable to the camp than to the birdwatchers. c. No. Although it is their right it is more valuable to the birdwatchers d. No. The right will be transferred to the birdwatchers since they value it more.
b.
When a _____ externality exists the socially optimal level of output will be greater than that resulting from a _____ market. Multiple choice question. a. private; positive b. positive; private c. negative; private d. positive; negative
b.
When a firm lacks the ability to prevent people from consuming a good or service the good is called Multiple choice question. a. a nonrival good b. a nonexcludable good. c. a public good. d. a private good.
b.
When externalities exist _____. Multiple choice question. a. efficiency and economic surplus are sometimes affected but not always b. outside intervention may be able to improve the market outcome increasing efficiency and economic surplus c. outside intervention usually decreases efficiency and economic surplus d outside intervention increases efficiency but not economic surplus
b.
When the consumption of a good or service by one person diminishes the amount available to someone else the good or service is said to be: Multiple choice question. a. nonexcludable. b. rivalrous. c. nonrivalrous. d. excludable.
b.
The provision of public goods that otherwise would be underprovided or not provided at all is one potential role of _____. Multiple choice question. a. banks b. non-banking private institutions c. the government d. the judiciary
c
A public good is any good or service that is _____. Multiple choice question. a. rivalrous and excludable b. rivalrous and nonexcludable c. nonrivalrous and nonexcludable d. nonrivalrous and excludable
c.
Externalities occur when Multiple choice question. a. property rights are clearly defined. b. the cost of a pollution prevention program exceeds the benefit. c. property rights are not clearly defined. d. the benefit of a pollution prevention program exceeds the cost.
c.
From an economic perspective pollution: Multiple choice question. a. has only costs. b. involves only benefits. c has both costs and benefits. d. is more likely in higher-income counties.
c.
In general when people have ownership (or control) of a resource Multiple choice question. a. they tend to overuse it and deplete it quickly. .b. they suffer from a labor-market failure. c. they have incentive to improve it. d. they have no incentive to improve it.
c.
Something we would rather have less of is called Multiple choice question. a. an economic good. b. a public good. c. an economic bad. d. nonrivalous in consumption.
c.
The demand for a good or service that considers only the private benefits of its consumption is called Multiple choice question. a. efficient demand b. classified demand c. private demand d. secret demand
c.
What would be a reason why the government would choose to tax the sale of cigarettes? Multiple choice question. a. The government wants to encourage people to buy cigarettes b. Cigarettes generate positive externalities. c. Cigarettes generate negative externalities. d. The government wants to keep the consumption of cigarettes the same.
c.
When a firm uses price to prevent people from consuming a good or service the good is called Multiple choice question. a. a public good. b. a private good. c. an excludable good. d. a nonrival good
c.
Well-defined property rights, low transaction costs, and resources that naturally gravitate toward the highest-valued function describe the _______ theorem.
coase