Eco exam 3

each of the following would be considered a common resource except

national defense

graph on tobacco* the industry creates...

negative externalities

which of the following policies is not an ex of a command and control policy?

none of the above is an ex

When you specialize and trade according to comparative advantage, you compare what you can do relative to ____ and choose to produce the output that has the ___ opportunity cost.

other things you could do; lowest

when a good is excludable

people can be prevented from using the good

the value and cost of goods are easiest to determine when the goods are..

private goods

refer to figure.. when the country for which the figure was drawn allows international trade in crude oil...

producer surplus changes from area C to B+C+D

When country allows trade and becomes an importer of a good.

domestic producers become worse off & domestic consumers become better off

refer to graph on tobacco. The socially optimal price and quantity..

1.8 and 35 units

what is the socially optimal quantity of output in this market? refer to graph

10 units

for the saddle market, area B represents

D

elephants are endangered, but cows are not because..

elephants are common goods and cows are private goods

Suppose that meat producers create a negative externality. What is the relationship between the equilibrium quantity and the socially optimal quanty of meat to be produced

The equilibrium quantity is less than the socially optimal quantity

Which of the following statements is NOT correct*

Without government intervention, the market will tend to undersupply products that produce negative externalities

which of the following goods is rival in consumption and excludable?

a can of coca-cola

in a certain city, the gov't is considering acquiring some land and turning it into a park...

all of the above

a tax on gas reduces road congestion bc gasoline

and driving are compliments

Which of the following would not be considered a private good?

cable tv service

When a country that imports a particular good imposes a tariff on that good...

consumer surplus decreases and total surplus decreases in the market for the good

graph*

export, 65 for export

a command and control policy is another term for a

gov't regulation

Negative externalities lead markets to produce:

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels

negative externalities lead markets to produce...*

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels

Historically... free trade does all the following except:

helps all citizens

private markets usually fail to provide lighthouses because

ship captains have incentives to use lighthouses without paying

which of the following represents a way that a gov't can help the private market to internalize an externality?

taxing goods that have negative externalities

workers displaced by trade eventually find jobs in...

the industries in which the country has a comparative advantage

Trade enhances economic well-being of a nation in the sense that

trade results in an increase in total surplus

an overcrowded beach is an example of

tragedy of the commons

private solutions may not be possible due to the costs of negotiating and enforcing these solutions. Such costs are called:

transaction costs*

which of the following is not correct...

without gov't intervention the market will tend to under supply products that produce neg externalities