Chapter 13 Quiz: Positive Externalities and Public Goods

ToasterOvensInc. is developing technology to make a toaster oven than uses less electricity. If successful, the technology will significantly reduce the amount of energy that is wasted due to product inefficiencies. If the firm sells only in response to the market price, the quantity shown in the third column is supplied. If the firm were also to receive the broader social benefits of the new technology, the willingness to supply is shown in the fourth column. Price Quantity Demanded Quantity Supplied Quantity Supplied If Firm Also Receives Social Benefits 15 800 500 710 16 740 540 740 17 680 580 770 18 620 620 800 19 560 660 830 20 500 700 860 If the firm were to receive a price based on both private and social benefits, the equilibrium price and quantity would be?

$1 : 250,000

ToasterOvensInc. is developing technology to make a toaster oven than uses less electricity. If successful, the technology will significantly reduce the amount of energy that is wasted due to product inefficiencies. If the firm sells only in response to the market price, the quantity shown in the third column is supplied. If the firm were also to receive the broader social benefits of the new technology, the willingness to supply is shown in the fourth column. Price Quantity Demanded Quantity Supplied Quantity Supplied If Firm Also Receives Social Benefits 15 800 500 710 16 740 540 740 17 680 580 770 18 620 620 800 19 560 660 830 20 500 700 860 If the firm were to receive a price based on both private and social benefits, the equilibrium price and quantity would be?

$16 : 740

Which of the following legislation was enacted in 1998 to allow copyright to be extended from 50 to 70 years after an author's death?

Sonny Bono Copyright Term Extension Act

The term "applied research" refers to research that is focused on a particular product that promises

an economic payoff in the short or medium-term.

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 _____________________________.

earn a hearty return; charge a high monopoly price permanently

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being

nonexcludable

Some studies done by economists have found that the original inventor receives _________________________________________________ from innovations, while other businesses and new product users receive the rest of the benefit.

one-third to one-half of the total economic benefits

Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology?

patents, copyrights, and each of the above

For a negative externality, the __________________________ than the costs imposed on society as a whole.

private costs of an action are less

Which of the following represents one of the methods that the government uses to promote technology?

protection of intellectual property

Raven Farms raises a substantial number of bees and uses the honey to produce its own skin healing cream. Raven Farms is situated next to the Oakcreek Apple Orchard. The bees from Raven Farms pollinate Oakcreek's apple trees. In this instance, Raven Farms

provides more social benefits than it derives in private benefits.

Many economists would view market competition as supporting the invention of new technology because it

provides short-term above-normal profits, and b and c as well.

There is a skating rink in your city that is open to anybody to use at any time. They even provide skates for people who don't own any. This is an example of a good that is

rivalrous and nonexcludable

Generally, market competition and technology can

sometimes a or b.

Market competition may sometimes encourage a firm to innovate out of fear because of the perception that

they will inevitably fall behind other competitors seeking out innovations.