Module 11, 12, 13, and 14 Assessment Questions
The government allows sulphur dioxide emissions of 4 parts per billion and has a tradable permits program. The 2 firms in the market pollute at a rate of 5 parts per billion and 6 parts per billion respectively. The 2 firms have the following costs to reduce emissions. The least expensive way to reach the government's mandate would cost ________. $175,000. $400,000 $325,000. $150,000.
$325,000
Assuming that Brazil can produce 100 pounds of beef or 10 autos and the United States can produce 40 pounds of beef or 30 autos, what is the opportunity cost of producing one pound of beef in Brazil? -1/5 of an auto. -1/10 of an auto. -1/100 of an auto -3/4 of an auto.
1/10 of an auto.
Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the second-to-bottom quintile of this income distribution is ________. -11.6% -5% -14.6% -12.6%
11.6%
Imagine an economy of 10 individuals. Their annual incomes are reported below. Approximately what percentage of this economy's income is held by the poorest 40% of the population? Name Income Name Income John $1000 Bob $300 Kitty $800 Salman $700 Walter $200 Dora $600 Steve $500 Anna $100 Samuel $800 Oprah $900 -18.6 -39.9 -13.6
18.6
Which of the following is true? -Countries should specialize in producing goods that they have an absolute advantage in producing. -A country producing products at a lower opportunity cost than other nations has comparative advantage with those products. -A nation cannot have an absolute advantage in the production of every good.
A country producing products at a lower opportunity cost than other nations has comparative advantage with those products.?
A monopsony is ________. -A market with a single provider of employees or labor -A market with a single employer of labor -a market with many various sources of labor -a market with many employers of labor.
A market with a single employer of labor
Which of these examples show market failure because of the difference between private costs and social costs? -A paper making firm clear cuts large swaths of forest land and diminishes wildlife habitats, which impacts hunting activities. -A new movie theater opens in a recently developed area of town. -A garden nursery runs $15 classes for the community to teach better landscaping skills. -A commercial fishery sells its fresh fish at a store in town. A local pet food business has contracted with the fishery to grind up the fish remains to add to its pet food for extra nutrition. This means no additional fishy smells at the local dump or in town.
A paper making firm clear cuts large swaths of forest land and diminishes wildlife habitats, which impacts hunting activities.
When it comes to diminishing discrimination in the economy, which of these action would produce the most effective results? -Altering social patterns -Creating laws against discrimination. -Altering social patterns and creating laws against discrimination. -Charging punitive damages.
Altering social patterns and creating laws against discrimination.
Why would businesses choose to reduce pollution? -Because they receive subsidies from the government. -Because their marginal cost is lower or equal to the marginal benefit of the reduction. -Because of pressure from competition. -Because has become an industry norm.
Because their marginal cost is lower or equal to the marginal benefit of the reduction.
What happens with poverty and inequality if high-income and low-income workers have rising incomes, but the incomes increase less for workers who are high-income earners? -Both inequality and poverty will increase. -Both inequality and poverty will decrease. -Inequality falls and poverty increases. -Inequality increases and poverty decreases.
Both inequality and poverty will decrease.
What happens with poverty and inequality if high-income and low-income workers have rising incomes, but the incomes increase less for workers who are high-income earners? -Inequality increases and poverty decreases. -Inequality falls and poverty increases. -Both inequality and poverty will decrease. -Both inequality and poverty will increase.
Both inequality and poverty will decrease.
Which of the following would be classified as a positive externality? -Allowing a mining company to use a natural lake to discharge waste. -Increased levels of air pollution in neighborhoods near a football stadium. -City buying 10,000 trees for green-space renewal projects. -Two firms trading pollution credits to avoid cutting their toxic emissions.
City buying 10,000 trees for green-space renewal projects.
What United States government department determines if imports from other countries are being traded fairly? -Securities and Exchange Commission (SEC) -Department of Commerce -Department of Trade -International Trade Commission
Department of Commerce
Which of the following is an economic benefit when countries participate in intra-industry trading? -Division of labor -The value chain -Diseconomies of scale
Division of Labor
Which of the following is an economic benefit when countries participate in intra-industry trading? -Division of labor -The value chain -Diseconomies of scale
Division of labor
An example of a regional trading agreement is the ________. -GATT -WTO -European Union
European Union
What are some of the causes of the poverty trap? -Welfare programs offer much incentives for people to go back to school or retrain. -Over the years a person cannot breakeven. -In the long run, working provides little financial gain. -People do not have access to assistance programs.
In the long run, working provides little financial gain.
________ is the term which describes how income is dealt out among members of society and can be seen as equitable or inequitable. -Worker pay distribution -Wealth distribution -Income distribution
Income distribution
What happens in the labor market when a labor union has market power? -It drives up wages in the market. -wages in the market would fall below the free market equilibrium. -more labor will be hired. -The union has less influence in the market.
It drives up wages in the market.
If a large firm plans to become more competitive in its market space and has already decreased its production costs using economies of scale, what would happen in relation to its intra-industry trade? -It would buy more machinery and equipment to produce its products faster. -It would foster less competition by creating a successful marketing campaign in the US. -It would work to expand its competitive products into other countries and offer variety to customers. -Variety would decrease since the large firm would become a monopoly.
It would work to expand its competitive products into other countries and offer variety to customers.
What would happen to the wages of low-skilled workers if there was an influx of low-skilled immigrants that came to the U.S.? -All wages would fall. -Low-skilled job wages would either increase or decrease. -Low-skilled job wages would decline. -Low-skilled job wages would increase.
Low-skilled job wages would decline.
The World Trade Organization (WTO) was established to ________. -end the intention of the General Agreement on Tariffs and Trade (GATT) -manage The World Bank -Mediate trade disputes -let trade disputes resolve themselves
Mediate trade disputes
An example of a regional trade agreements is ________. -Economic Union -NAFTA -WTO -GATT
NAFTA
If a firm was receiving subsidies from its government to produce and lower its operating costs, what may happen when going to sell its products to other countries? -Other countries are likely to continue to practice free trade in a competitive environment. -Tariffs on the goods with lower operating costs would be eliminated. -The firm's own government would impose import quotas, allowing it to only produce a certain amount. -Other countries may enact protectionist policies to protect their own countries goods.
Other countries may enact protectionist policies to protect their own countries goods.
If the regulations for environmental protection were strictly adhered to and industries, cities, and individuals considered the environment crucial for survival and a thriving market, what would be the benefits from this change? -People would be healthier and probably live longer. -The farming, and fishing industries would decrease productivity and decline. -Property values would decline. -Polluting industries would have higher profit
People would be healthier and probably live longer.
If the regulations for environmental protection were strictly adhered to and industries, cities, and individuals considered the environment crucial for survival and a thriving market, what would be the benefits from this change? -The farming, and fishing industries would decrease productivity and decline. -Polluting industries would have higher profit -Property values would decline. -People would be healthier and probably live longer.
People would be healthier and probably live longer.
Which of the following statements about public goods is true? -Public goods usually produce large negative externalities -Public goods are government produced because it is the government only that can solve the problem of free riders. -Public goods tend to be difficult for private firms to produce profitably because their sale prices are low. -Public goods tend to be difficult for private firms to produce profitably because of the large number of potential free riders.
Public goods tend to be difficult for private firms to produce profitably because of the large number of potential free riders.
________ is the total benefit from producing or consuming a good or service, including all the private benefits plus any external benefits of production or consumption. -Private benefit -Market benefit -External benefit -Social benefit
Social Benefit
Which of the following are considered anti-poverty government programs under the safety net grouping? -TANF, EITC, SNAP, and Medicaid -TANF, EITC, and WMP -TANF, EITC, SNAP, and Medicare
TANF, EITC, SNAP, and Medicaid
Which of the following organizations was created from the General Agreement on Tariffs and Trade (GATT)? -The United Nations (UN) -The International Trade Organization (ITO) -The World Trade Organization (WTO)
The World Trade Organization (WTO)
Which of the following determinants are used to define the poverty line? -Amount of money in a savings account. -The cost of basic housing -Type of job people work. -Average cost of dinner at a restaurant.
The cost of basic housing
There is a large park which is owned by the local city government with a food forest containing many fruit and nut trees. What will most likely happen to that food forest? -The food forest is expanded and more trees are added. -A local gardening club will create a group to collect the food forest fruits and nuts. -The food forest will be over-harvested. -The food forest will be well managed to ensure long term sustainability.
The food forest will be over-harvested.
The gender earnings gap has been declining since 1980, though -The gap decreased in the 1970s. -The gap increased in the 1970s. -The gap was closed in the 1970s -The gap did not change much in the 70s.
The gap did not change much in the 70s.
What is a reason pollution tax results in a pollution level that is socially efficient? -The pollution tax acts as a punishment for producers for their mishandeling of the environment. -The pollution tax makes the polluter account for the external costs of their actions. -Government revenues increase. -Under allocation of resources to polluting markets no longer takes place.
The pollution tax makes the polluter account for the external costs of their actions.
Imagine an economy of 10 individuals. Their annual incomes are reported below. Imagine that $100 of Oprah's income is transferred to Anna. What is true? Name Income Name Income John $1000 Bob $300 Kitty $800 Salman $700 Walter $200 Dora $600 Steve $500 Anna $100 Samuel $800 Oprah $900 -The richest 20% of the population's income share falls from about 59.3% to about 57.6%. -The richest 40% of the population's income share grows from about 58% to about 59.3%. -The poorest 40% of the population's income share grows from about 58% to about 59.3%. -The poorest 20% of the population's income share grows from about 5.0% to about 6.8%.
The poorest 20% of the population's income share grows from about 5.0% to about 6.8%.
What happens to the value of a firm's additional output sold when the firm has some market power? -The value of that additional output sold is the price. -The value of that additional output sold is its marginal profit. -The value of that additional output sold is its marginal costs. -The value of that additional output sold is its marginal revenue.
The value of that additional output sold is its marginal revenue.
Suppose a government starts to phase out its antipoverty program payments more slowly in order for the near-poor to reach self-sufficiency. What would one of the criticisms be about this policy? -Incentives to work would be reduced . -The near-poor will not be required to pay back benefits. -This antipoverty program costs the government more money. -The near-poor may still lack skills for better paying jobs.
This antipoverty program costs the government more money.
What is the purpose of the World Trade Organization (WTO) ? -To bring all sizes of nations together to negotiate trade deals and resolve trade disputes between each other. -To advise the United Nations on international political policies. -To broker trade agreements between the worlds largest international companies.
To bring all sizes of nations together to negotiate trade deals and resolve trade disputes between each other.?
Which of the following are examples of negative externalities? -Your neighbor paints her house and upgrades the landscaping. -An airport is constructed to support commerce and travel in your community -Trash dumped upstream flows downstream right past your house.
Trash dumped upstream flows downstream right past your house.
Which of the following organizations was created from the General Agreement on Tariffs and Trade (GATT)? -The United Nations (UN) -The International Trade Organization (ITO) -The World Trade Organization (WTO)
WTO
Which of the following is a potential source of income inequality? -Decreased demand for high-skilled workers. -Increased influence of unions. -Wage disparity -Increased demand for low-skilled workers.
Wage disparity
What is the environment under which externalities exist? -When a large amount of common goods are created. -Social cost is equal to private cost for a given good or service. -When private benefits are different from social benefits. -When third party benefits are higher than social benefits.
When private benefits are different from social benefits.
Yekutia has the resources to manufacture 320 motorcycles or 570 lawn-mowers per year. The country of Bezanitia, has the capability of producing 230 motorcycles or 410 lawn-mowers per year. Which country has the largest opportunity cost to produce one more motorcycle and what is the opportunity cost to that country? -Bezanitia and Yekutia have equal opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year. -Bezanitia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year. -Yekutia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.
Yekutia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.?
Overall, free trade results in ________. -no change in price or quantity. -a decrease in price and an increase in quantity -an increase in price and a decrease in quantity -a decrease in price and a decrease in quantity
a decrease in price and an increase in quantity
Which of the following describes a situation in which a third party, outside the transaction, suffers from a market transaction? -a positive externality. -An efficient market. -a public good. -a negative externality
a negative externality
Radio broadcasting is -a public good because more than one person can use it at a time and no one can be excluded from receiving it. -a public good because one does not have to pay a subscription fee to listen to the radio. -a private good because most radio stations are privately owned.
a public good because more than one person can use it at a time and no one can be excluded from receiving it
An example of a tariff would be ________. -rules and regulations placed on a good -A free trade agreement. -a limit on the number of a good imported into a country -a tax on an imported good
a tax on an imported good
Ghana produces cocoa for chocolate with less land and labor in comparison with all countries. If cocoa labor and cocoa land cost the same in every country, then Ghana has -an absolute advantage in cocoa production. -both a comparative and absolute advantage in cocoa production. -a comparative advantage in cocoa production. -an opportunity to benefit from specializing in cocoa production.
an absolute advantage in cocoa production.
The social benefits from education -are lower than the private benefits and therefore education leads to positive externalities. -are higher than the private benefits and therefore education leads to positive externalities. -are higher than the private benefits and therefore education leads to negative externalities. -are the same as the private benefits and therefore education has no negative externalities.
are higher than the private benefits and therefore education leads to positive externalities.
A positive externality arises when a third party, outside the market transaction, ________. -benefits from a market transaction -pays a pollution tax to balance social costs -Pays less for the good or service -fails to allocate resources efficiently
benefits from a market transaction
A positive externality arises when a third party, outside the market transaction, ________. -fails to allocate resources efficiently -Pays less for the good or service -benefits from a market transaction -pays a pollution tax to balance social costs
benefits from a market transaction
Calculating a(n) ________ can help the government make antipoverty programs such as TANF (the basic welfare program), SNAP (food stamps), Medicaid, and the earned income tax credit (EITC) be more effective. -budget constraint line -income horizontal line -government program guarantee
budget constraint line
The poverty line defines the income needed for a basic standard of living and is determined by ________. -comparing the share of the total income in society that is received by different groups -conducting phone surveys to tabulate a representative sampling and averaging the results -by tripling the inflation-adjusted cost of a minimum food diet from the 1960s and adjusting for other factors such as size of the family, composition and age
by tripling the inflation-adjusted cost of a minimum food diet from the 1960s and adjusting for other factors such as size of the family, composition and age
Governmental public policies have the potential to create a series of programs to assist people to transform the ________ under which they live. -home town -social good -circumstances -laws
circumstances
When wages and working conditions are agreed upon by business owners and a union, the process is called ________. -collective bargaining -union negotiations -a strike -a wage agreement
collective bargaining
Goods that are nonexcludable and rivalrous are called -free goods. -common goods. -private goods. -public goods
common goods
Together, intra-industry trade and economies of scale provide ________. -competition between producers -no variety to consumers -specialization through machinery
competition between producers?
If pollutants are emitted into the air and water, what external costs might be incurred as a result? -higher cost of production for the polluting businesses. -compromised recreation possibilities for citizens. -cost of production for polluting businesses. -profit for polluting businesses.
compromised recreation possibilities for citizens.
Which of the following is NOT a potential source of income inequality ________. -decreased influence of unions -decreased demand for high-skilled workers -wage disparity
decreased demand for high-skilled workers
The General Agreement on Tariffs and Trade (GATT) helps promote trade by -increasing rules and regulations -increasing tariffs -eliminating agreements like NAFTA -decreasing quotas
decreasing quotas
Many residents of a particular town enjoy taking their dogs with them when they go to their local park for recreation and picnics. Everybody enjoys the park more when each group cleans up after themselves and their pets, but nobody enjoys the act of cleaning up after themselves or their dogs. In this situation, we can expect the park to be ________, due to a ________. -clean; positive externality. -clean; prisoner's dilemma -dirty; positive externality -dirty; prisoner's dilemma
dirty; prisoner's dilemma
An advantage to engaging in intra-industry trade between countries includes ________. -diseconomies of scale -economies of scale -the value chain -extra-industry trade
economies of scale
Ella lives in Flint, Michigan where the city water was contaminated with harmful chemicals and lead. Ella's infant now suffers from mental retardation due to lead poisoning. This is an example of a/an -social cost for Ella and her family because they bear some cost derived from the water distribution activity. -external cost for Ella and her family because they bear some cost derived from the water distribution activity. -private cost for the water distribution company. -social cost for the water distribution company.
external cost for Ella and her family because they bear some cost derived from the water distribution activity.
Market failure describes a situation in which the market itself -avoids externalities. -balances social costs and benefits. -fails to reach a reasonable price. -fails to allocate resources efficiently
fails to allocate resources efficiently
Market failure describes a situation in which the market itself -fails to reach a reasonable price. -avoids externalities. -balances social costs and benefits. -fails to allocate resources efficiently
fails to allocate resources efficiently
If a community has a public vegetable garden at the city park with a take-as-you-wish policy, the veggies would be considered -public goods. -common goods. -free goods.
free goods.
Free trade results in ________. -gains from trade -losses from trade -gains from only exports
gains from trade?
One argument against government intervention is if society wishes a ________ level of economic output it must also accept a ________ degree of inequality. -high; high -low; high -high; low
high; high
When going over the arguments opposed to government intervention, one states that society must accept a ________ degree of inequality in exchange for if it wishes to have a ________ level of economic output. -high; lower -high; higher -low; lower -zero; higher
high; higher
The government can limit the bite of the poverty trap by ________. -limiting the number of participants in the program -not imposing a set time limit on benefits -imposing work requirements as a condition of receiving benefits
imposing work requirements as a condition of receiving benefits
The effects of a poverty trap can be reduced by ________. -limiting the number of participants in the program. -not imposing work requirements as a condition of receiving benefits. -initially decreasing the government payments by smaller amounts -providing more financial assistance.
initially decreasing the government payments by smaller amounts
A market fails when -it does not lead to an efficient price / quantity outcome. -the supply of the product fails to keep up with the demand for the product. -products are non-rivalrous.
it does not lead to an efficient price / quantity outcome.
Which of these answers is not an example of trade barriers? -import quotas -tariffs -lower prices
lower prices
The ________ is the additional output produced when a firm hires one more worker. -market for labor. -total product of labor. -marginal product of labor -average product of labor
marginal product of labor
An example of a disruptive market change is ________. -new technology -a new type of automobile -a new brand of cereal
new technology
For free ridership to happen, the good or service must be ________. -nonexcludable -rivalrous -a private good or service
nonexcludable
For a good to be classified as ________, one person's use of the good should not prevent others from using it at the same time. -nonrivalrous -common -nonexcludable -essential
nonrivalrous
For a good to be classified as ________, one person's use of the good should not prevent others from using it at the same time. -nonrivalrous -nonexcludable -common -essential
nonrivalrous
Which of the following are examples of how patents are not always a perfect way to encourage innovation: -patents are not well protected by the law. -it is very expensive to apply for a patent. -not every new idea can be protected with a patent or copyright. -patents in the U.S. do not last very long.
not every new idea can be protected with a patent or copyright.
When the social cost of producing a good is higher than the private cost, then -negative externalities exist. -positive externalities exist. -there are no externalities.
positive externalities exist
The U.S. Government has a variety of policies that enable inventors to ________, such as the granting of patents and ________. -protect their inventions; limited copyrights during the inventor's lifetime. -receive a reasonable rate of return; lifetime intellectual property rights. -receive an increased rate of return; subsidization of research and development. -register their inventions; unlimited copyrights during the inventor's lifetime.
receive an increased rate of return; subsidization of research and development.
The assistance programs from the government that provide assistance to the near-poor and the poor are collectively known as the ________. -poverty trap -safety net -poverty assistance net -safety factors
safety net
Externalities exist when -Social cost is equal to private cost for a given good or service. -social costs are different from private costs. -common goods are produced. -costs of production for a firm are very high.
social costs are different from private costs.
Tradable pollution permits can lower the cost of reducing pollution because -the system is easier to setup and control. -some firms can reduce pollution at a lower cost than others. -the government standards are lower. -It imposes strict mandates for firms
some firms can reduce pollution at a lower cost than others.
International trade policies benefiting from specialization and comparative advantage can make the average worker better off, but a tradeoff is ________. -worker productivity could go down -some workers could lose their jobs -consumers could pay more for products
some workers could lose their jobs?
The laws associated with command-and-control regulations -attempt to reduce the private costs of businesses. -specify allowable quantities of pollution. -allow a wide range of possible solutions for pollution-control. -offer incentives for businesses to exceed the allowable quantities of pollution.
specify allowable quantities of pollution.
The laws associated with command-and-control regulations -specify allowable quantities of pollution. -allow a wide range of possible solutions for pollution-control. -attempt to reduce the private costs of businesses. -offer incentives for businesses to exceed the allowable quantities of pollution.
specify allowable quantities of pollution.
The last half-century has seen a powerful surge of international trade due to ________. -technological developments -reversals of regional trade agreements -GATT renegotiations
technological developments
The more one reduces pollution, -the lower the marginal cost. -the higher the marginal cost. -the higher the marginal benefit. -The lower the total benefit
the higher the marginal cost.
The poverty line is determined by ________. -surveys completed on the elderly -the level of income needed to cover basic needs -a percentage of the average income in the country -annual estimates based on a sampling of U.S. middle- and high-income households
the level of income needed to cover basic needs
The optimum level of pollution in a market would be -the level of pollution where the marginal cost of reducing pollution is minimized. -the level of pollution where the marginal cost and benefit of reducing pollution are equal. -When the negative externalities are eliminated. -zero pollution.
the level of pollution where the marginal cost and benefit of reducing pollution are equal.
If a rise in incomes for both low-income and high-income workers is higher for the high-income workers, -then poverty will rise and inequality will rise. -then poverty will fall and inequality will fall. -then poverty will fall and inequality will rise. -then poverty will rise and inequality will rise.
then poverty will fall and inequality will rise.
Take the scenario where there are only a small number of business in a market and each of the have a different production process and cost structures. What pollution reducing strategy would fit this market most efficiently? -Taxes -tradable permits. -Emission limits. -penalty fees.
tradable permits
If you are highly asthmatic, then having high levels of industrial air pollutants waft over your house every day ________. -would be a negative externality -is a voluntary exchange -is a private cost -would be an external voluntary exchange
would be a negative externality
Zero pollution -would not be possible because there would not be enough benefits from achieving zero pollution. -would be efficient because the cost of achieving zero pollution would be lower than the benefits of it. -would not be efficient because the cost of achieving zero pollution would be greater than the benefits of it.
would not be efficient because the cost of achieving zero pollution would be greater than the benefits of it.
