Econ Exam 2 Review

Key limitations on the government correcting "market failures" include: Information Misaligned incentives between the government and citizens The incentive of the government to tax and spend to help politicians get elected or re-elected. All of the above.

All of the above.

Restaurant owners have an incentive to Fully account for the value impact of restaurant smoking on nonsmokers. Fully account for the value of restaurant smoking to smokers. Take into account how smoking shifts the overall demand curve for restaurant meals. All of the above.

All of the above.

To evaluate recycling, you must consider The demand for recycled products, The incremental costs to society for recycling products, The value of the land used for landfills, All of the above. B and C above.

All of the above.

Sewage treatment is an example of An externality, An internalized externality, The need to return resources to their natural state, All of the above, A and C above.

An externality,

The key to solving problems associated with smoking in restaurants is to Assign property rights to the air to smokers. Assign property rights to the air to nonsmokers. Ban smoking to prevent associated diseases. Assign property rights to restaurant owners.

Assign property rights to restaurant owners.

Table 4 -2 Consumer/ Willingness to Pay Anya $24 Basil 20 Celeste 15 Dralon 12 Esther 7 Refer to Table 4 -2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $18 - Anya and Basil will each buy two tickets. - Anya and Basil receive a total of $26 of consumer surplus from buying one ticket each. No one else will buy a ticket. - Basil will receive $2 of consumer surplus from buying one ticket. - Celeste, Dralon, and Esther will receive a total of $34 of consumer surplus since they will buy no tickets.

Basil will receive $2 of consumer surplus from buying one ticket. Because the other answers are false, use CS equation.

Which of the following statements about rent seeking is false? If a firm can benefit from government intervention in the economy, it is more likely to spend resources attempting to secure this intervention than toward innovating its product to gain a competitive edge in the market. A person is engaging in rent-seeking behavior when he uses the political process to acquire ownership of a resource that belongs to the public. Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law. Rent seeking often involves governments because governments transfer huge amounts of funds that economic agents must compete for.

Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.3newf190624191138/f1q10g1.jpg The price ceiling depicted in the above figure results in producer surplus decreasing from $24 thousand to $6 thousand. consumer surplus increasing from $30 thousand to $34.5 thousand. a deadweight loss of $16 thousand. Both answers A and B are correct.

Both answers A and B are correct.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.5newf190618192145/f1q3g1.jpg In the figure above, suppose that the government imposes a tax of $4 per pizza. Then, the buyers and sellers equally share the incidence of the tax. shaded area is the deadweight loss from the tax. shaded area is the tax revenue from the tax. Both answers A and B are correct. Both answers A and C are correct.

Both answers A and B are correct.

How does a free market eliminate a shortage? By letting the price rise By creating a price ceiling. By letting the price fall By creating quotas.

By letting the price rise

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia? Market efficiency will increase. Deadweight loss will increase. Producer surplus will increase. Consumer surplus will increase.

Deadweight loss will increase.

The central question In trying to determine whether to involve the government in an economic issue is Determining whether or not the government can be relied on to make things better. Determining whether or not property rights are involved. Determining the social value of the goods in question. Determining the appropriate tax rate.

Determining whether or not the government can be relied on to make things better.

Which of the following statements is true? Economists believe that marginal and average tax rates influence behavior to the same extent. Economists believe that average tax rates have a greater influence on behavior than marginal tax rates. Economists believe that neither marginal nor average tax rates have any influence on behavior. Economists believe that marginal tax rates have a greater influence on behavior than average tax rates.

Economists believe that marginal tax rates have a greater influence on behavior than average tax rates.

According to the video, the government should ban smoking in restaurants because of the diseases caused by passive smoking True False

False

Banning smoking in restaurants is clearly economically efficient because passive smoke is harmful. TF

False

If transactions costs are low, private bargaining will always result in an efficient solution to the problem of externalities. True False

False

Recycling is an economic problem because the land is substantially damaged by the creation of garbage dumps. TF

False

Recycling is not an economic problem because there is only so much land on Earth. True False

False

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems. True False

False

The best solution to water pollution is to make the responsible people clean the water and return it to its natural state. TF

False

The government can be relied on to efficiently solve problems associated with pollution through (Pigovian) taxes. True False

False

The point of the video is that the government can seldom enhance economic efficiency. TF

False

The social problem of smoking in restaurants is caused because smokers want to pollute the air, causing harm to people around them. TF

False

The use of landfills means the land will lose all its value for subsequent use.True False

False

When there is a positive externality in a free market, too much of the good is produced and consumed. True False

False

Economics shows that it is inefficient to recycle plastic bottles because they have little value. True. False.

False.

Which of the following activities can give rise to a positive externality? Buying a pair of gloves Consuming herbal products Getting a flu vaccination Jogging every morning

Getting a flu vaccination

Which of the following is an implication of the Coase Theorem? Negotiation leads to an efficient outcome if transaction costs are high. Bargaining cannot lead to an efficient allocation of resources. Taxation leads to an efficient allocation of resources regardless of who holds the property rights. Government intervention is not always necessary to solve externality problems.

Government intervention is not always necessary to solve externality problems.

In which of the following cases does the tragedy of the commons occur? I.Cattle grazing on private ranches. II.Catching lobsters off the coast of Florida. III.Raising salmon on salmon farms. IV.Using legal services provided by the courts. II only I and IV only I only II and III only

II only

The net effect of smoking in a restaurant is to Lower demand, Increase demand, Leave demand unchanged. It depends - there is no general answer.

It depends - there is no general answer.

What is regulatory capture? It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents. It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest. It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign. It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.

It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of a Pigovian subsidy. a transactions cost. the Coase Theorem. a Pigovian tax.

a Pigovian tax.

If the social cost of producing a good or service exceeds the private cost the market achieves economic efficiency. a positive externality exists. a negative externality exists. the sum of consumer surplus and producer surplus is maximized.

a negative externality exists.

Suppose that a state installs a toll booth on a highway and requires drivers to pay $1.00 before entering the highway. Installation of the toll booth changes: a nonexcludable good into an excludable good. public good into a private good. a nonrival good into a nonexcludable good. a nonrival good into a rival good.

a nonexcludable good into an excludable good.

If the social benefit of consuming a good or a service exceeds the private benefit the market achieves economic efficiency. a positive externality exists. the sum of consumer surplus and producer surplus is maximized. a negative externality exists.

a positive externality exists.

"Free riding" is a characteristic of which type of good? a public good a private good a good that is both rival and excludable a common resource

a public good

An example of a common resource is airline travel. college education. a private beach. a public parking lot.

a public parking lot.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.4newf190624191155/f1q5g1.jpg In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be a shortage and a decrease in search costs. a shortage and an increase in search costs. a surplus and a decrease in search costs. a surplus and an increase in search costs.

a shortage and an increase in search costs.

If the sellers of a good are taxed for each unit sold, ________. the price that sellers receive increases the price that buyers need to pay falls a larger quantity of the good is sold a smaller quantity of the good is sold

a smaller quantity of the good is sold

A tariff is a tax on imported goods. a government imposed restriction on the quantity of a specific good that can be imported into the country and sold. the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. a subsidy on domestically produced goods.

a tax on imported goods.

Rational ignorance is the decision NOT to acquire information because the marginal cost of doing so exceeds the expected marginal benefit. vote in elections. acquire information because the marginal cost of doing so equals the expected marginal benefit. acquire information because the marginal benefit of doing so exceeds the marginal cost. follow the principle of minimum differentiation.

acquire information because the marginal cost of doing so exceeds the expected marginal benefit.

The market demand for a public good can be determined by estimating the value of the benefit that each unit provides and multiplying that by the number of consumers. adding up how much each citizen expects to consume at each possible price. adding up how much each consumer is willing to pay for each unit of the public good. adding up the total private benefits and external benefits that each quantity provides the citizens of a country.

adding up how much each consumer is willing to pay for each unit of the public good.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.6newf190618192128/f1q1g1.jpg In the figure above, suppose the market is at equilibrium. Then area A is the marginal benefit. amount of the producer surplus. amount of the consumer surplus. deadweight loss. marginal cost.

amount of the consumer surplus.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.6newf190618192128/f1q5g1.jpg In the figure above, suppose the market is at equilibrium. Then area B is the amount of the producer surplus. marginal cost. deadweight loss. amount of the consumer surplus. marginal benefit

amount of the producer surplus.

An externality occurs when ________.x the government regulates production and consumption decisions the quantity demanded of a good exceeds the quantity supplied an economic activity affects third parties not engaged in the activity the quantity supplied of a good exceeds the quantity demanded

an economic activity affects third parties not engaged in the activity

The public choice model applies economic analysis to the collective decision making of consumers. applies economic analysis to government decision making. examines the degree of market power that the public exerts in a market economy. examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences.

applies economic analysis to government decision making.

In the political market place, typical voters are sometimes rationally ignorant about a policy. are fully informed. support policies that they think will make the poor better off. fire bureaucrats who support efficient policies.

are sometimes rationally ignorant about a policy.

The total amount of tax you pay divided by your total income is the marginal tax rate. total tax rate. average tax rate. proportional tax rate.

average tax rate.

With the debris of more than 50 years of climbing on the beautiful high slopes - oxygen canisters, tents, backpacks and even some bodies - Mount Everest has been called the world's highest garbage dump. Currently climbers must pay only a $3,000 trash-collection fee, which is woefully less than the actual cost of collecting trash. If climbers had to pay a higher trash-collection fee, the use of this common resource would become more efficient. become less efficient. not deviate from the current level of efficiency. More information about who would collect the trash is needed.

become more efficient.

In general, who will benefit as the result of a tariff? I.Domestic producers II.Domestic consumers III.The domestic government I only II only both I and III both II and III All of the above are correct.

both I and III

The HPV vaccine protects against human papillomavirus (HPV) that causes cancer. It protects both the person getting the vaccine and the sexual partners of that person. When calculating the marginal social benefit of the vaccine, it is necessary to include only the marginal private benefit. only the marginal external benefit. both the marginal private benefit and the marginal external benefit. either the marginal private benefit or the marginal external benefit, whichever is larger.

both the marginal private benefit and the marginal external benefit.

A key advantage of assigning property rights to owners of restaurants is that They will usually ban smoking. Smokers and nonsmokers are likely to be able to eat meals the way they like. They will usually allow smoking. They will usually set up no smoking sections.

Smokers and nonsmokers are likely to be able to eat meals the way they like.

Which of the following exemplifies the tragedy of the commons? The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who hunt it for its tough and leathery hide. Canadian citizens receive free universal health care administered by provincial governments. Residents on the northern coast of California receive only one public broadcasting signal which may be eliminated altogether if government funding is cut. The Pleasant Hill community is growing so fast that the city's only post office is not able to keep pace with the population growth in the community.

The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who hunt it for its tough and leathery hide.

Which of the following describes how a negative externality affects a competitive market? The externality causes consumer surplus to exceed producer surplus. The externality causes a difference between the private cost of production and the equilibrium price. The externality causes a difference between the private cost of production and the private benefit from consumption. The externality causes a difference between the private cost of production and the social cost.

The externality causes a difference between the private cost of production and the social cost.

Which of the following characterizes the largest difference between the way decisions are made in the private sector versus the public sector? In both sectors individuals will try to maximize their own individual gains over the gains of others. The workers themselves are really quite different types of people. Costs and resources are vastly different in each sector. The incentive system for individuals to perform efficiently are vastly different.

The incentive system for individuals to perform efficiently are vastly different.

Which of the following happens when a Pigouvian subsidy is provided? The marginal social benefit curve shifts downward. The marginal private cost curve shifts downward. The marginal social cost curve shifts upward. The marginal private benefit curve shifts upward.

The marginal private benefit curve shifts upward.

Business leaders often say that there is a "shortage" of skilled workers, and so they argue that immigrants need to be brought in to do these jobs. For example, an AP article entitled "New York farmers fear a shortage of skilled workers," pointing out that a special U.S. visa program, the H-2A program, "allows employers to hire foreign workers temporarily if they show that they were not able to find U.S. workers for the jobs." (Source: Thompson, Carolyn. May 13, 2008. N.Y. farmers fear a shortage of skilled workers Associated Press.) How do unregulated markets cure a "labor shortage" when there are no immigrants to boost the labor supply? Contract production. Let the price of labor decrease. Expand production. Let the price of labor increase.

Let the price of labor increase.

Suppose that the price of a bottle of soda is $2. Vonda's marginal cost of production is $1.25 for the first bottle, Galiela's marginal cost of production is $1.50 for the second bottle, Gretchen's marginal cost of production is $1.75 for the third bottle, and Matt's marginal cost of production is $2 for the fourth bottle. Which producer gets no producer surplus? Matt Vonda Galiela Gretchen

Matt Because Matt's cost = price so no surplus

In the town of Freedonia, the government declares that all street parking must be free: There can be no parking meters. In an almost identical town of Meterville, parking costs $5 per hour (or $1.25 per 15 minutes). One town will tend to attract shoppers who hate driving around looking for parking. Which one? Freedonia Indeterminate with the given information. Meterville

Meterville

In the town of Freedonia, the government declares that all street parking must be free: There can be no parking meters. In an almost identical town of Meterville, parking costs $5 per hour (or $1.25 per 15 minutes). Where will it be easier to find parking: in Freedonia or Meterville? Indeterminate with the given information. Freedonia Meterville

Meterville

When discussing issues of pollution, it is clear that we can easily delineate who is the victim and who is the villain. the most efficient amount of pollution is no pollution at all. since polluters are harming other people they must be made to stop polluting. None of the above are true.

None of the above are true.

According to the video, W. Kip Viscusi studied tobacco smoking and concluded that There were significant negative externalities associated with smoking, There were significant net social benefits to smoking. Smokers, in general, made poor decisions. None of the above.

None of the above.

Beginning in the 1950s economists began to investigate incentives within government. They found that: Government should not get involved in the economy. Government should only implement monetary policy income taxes, and leave the rest of the economy alone. One should be cautious in calling on the government to improve economic performance. None of the above.

One should be cautious in calling on the government to improve economic performance.

The following equations represent the demand and supply for silver pendants. Q D = 50 - 2 P Q S = -10 + 2 P What is the equilibrium price ( P) and quantity ( Q - in thousands) of pendants? P = $10; Q = 30 thousand P = $20; Q = 15 thousand P = $50; Q = 10 thousand P = $15; Q = 20 thousand

P = $15; Q = 20 thousand Because the graph is in equilibrium QD= QS so we can set the equations equal to eachother and solve.

If the quantity of fishing poles demanded is represented by the equation Q D = 60 - P then the corresponding price of fishing poles is represented by the equation P = QD + 60. P = 0.6QD + 10. P = -60 + QD. P = 60 - QD.

P = 60 - Q D.

According to the video, the key to Viscusi's findings about the net impact of smoking on healthcare costs is that Smoking does not really cause significant health effects, People who smoke tend to weigh less and the lower weight offsets the effects of smoking. People who smoke need more medical care, but they also (unfortunately) tend to die younger, and that creates an offsetting reduction in health care costs. None of the above.

People who smoke need more medical care, but they also (unfortunately) tend to die younger, and that creates an offsetting reduction in health care costs.

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph? The supply curve for cases of beer would shift to the right by $1. The supply curve for cases of beer would shift to the left by more than $1. The supply curve for cases of beer would shift to the left by less than $1. The supply curve for cases of beer would shift to the left by $1.

The supply curve for cases of beer would shift to the left by $1.

Assume that there is rent control in Chicago. Which of the following is true? Consumer surplus will increase and as a result all consumers in the rental market will benefit. All consumers in the rental market will benefit because the rent will be lower. The total surplus will fall because there will be a shortage of apartments. The total surplus will rise because consumer surplus will increase.

The total surplus will fall because there will be a shortage of apartments.

The opportunity cost of using land for a landfill is determined by: The value of the land before the landfill was developed, minus the cost of the land after the landfill is full. The cost of land in neighboring counties. The full value of the land at the time of purchase, since land used for landfill has no subsequent value. All of the above. B and C above.

The value of the land before the landfill was developed, minus the cost of the land after the landfill is full.

A price ceiling is a legally determined maximum price that sellers may charge. T/F

True

For the Coase theorem to work there must be clear assignment of property rights. True False

True

One problem with using taxes to solve economic externalities is that politicians may spend the money on things they like, rather than things their constituents want. TF

True

Recycling is an economic issue because the goods that are recycled, the land for landfills, and the trucks and labor needed for both recycling and trash disposal are all examples of scarce resources. TF

True

The possibility of "government failures" should be evaluated before getting the government involved in addressing "market failures." TF

True

The social benefit of a given level of a public good is the vertical sum of all private benefits for that level. TF

True

The social problem of smoking in restaurants because smokers and nonsmokers want to use the air in different ways. True False

True

The video indicated that there is a significant difference between recycling fluorescent lights and plastic bottles. TF

True

Marginal cost is the additional cost to a firm of producing one more unit of a good or service. T/F

True Because definition

For a given supply curve, the deadweight loss from the imposition of a tax is smaller if demand is more elastic.

True False

If the price of chewing gum is represented by equation P = 25 - 0.5 Q D, then the corresponding quantity of chewing gum demanded is represented by the equation QD = -5 + 10P. QD = 2P - 0.5. QD = 0.5P + 25. QD = 50 -2P.

Q D = 50 -2 P. Put in terms of QD, basic algebra.

If the price of hairspray is represented by equation P = 10 - 0.2 Q D, then the corresponding quantity of hairspray demanded is represented by the equation QD = 5P - 2. QD = -10 + 0.2P. QD = 0.5P + 2. QD = 50 -5P.

Q D = 50 -5 P.

The economically efficient amount of recycling will occur if Recyclers pay the full cost of picking up recycled products, The government subsidizes recycling by paying for the cost of pickup. All goods are recycled whenever possible. B and C above.

Recyclers pay the full cost of picking up recycled products,

Price controls distribute resources in many unintended ways. In the following cases below, who will probably spend more time waiting in line to get scarce, price-controlled goods? Choose one from each pair: Working people Retired people

Retired people

A ________ tax system is one in which tax rates increase with taxable base incomes. regressive proportional progressive supplementary

progressive

In the United States, the federal income tax is an example of a progressive tax. regressive tax. flat tax. proportional tax.

progressive tax.

When it comes to ________ goods, it is important to remember only one level of output can be realized and consumers are ________ for that level. public; only willing to pay the same amount private; only willing to pay the same amount public; willing to pay different amounts private; willing to pay different amounts

public; willing to pay different amounts

In New York City, about 1 million apartments are subject to rent control by the local government. Rent control is a price floor which sets a minimum rent for apartments. puts a legal limit on the rent that landlords can charge for an apartment. is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. only applies to those apartments which are owned and rented out by the local government.

puts a legal limit on the rent that landlords can charge for an apartment.

If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's producers end up producing less of the good than they otherwise would. receiving a higher price for the good than they otherwise would. receiving a lower profit for the domestic good than they otherwise would. receiving a lower price for the good than they otherwise would.

receiving a higher price for the good than they otherwise would.

Jamal earns $160,000 per year and Josephina earns $80,000 per year. They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax. In relation to their relative incomes, this is an example of a marginal tax. regressive tax. proportional tax. progressive tax.

regressive tax.

If you pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is regressive. proportional. progressive. There is insufficient information to answer the question.

regressive.

A tragedy of the commons occurs when a resource is non-rival and excludable. rival and non-excludable. non-rival and non-excludable. rival and excludable.

rival and non-excludable.

If the government taxes a steel company by an amount equal to the damages of each marginal ton of steel, then the steel company's marginal cost curve is the same as the marginal social cost curve. private cost curve. benefit cost curve. damage cost curve.

social cost curve.

If the production of a good generates external benefits, the government could increase efficiency by subsidizing production of the good to increase the amount produced. requiring all producers of the product to be licensed to produce the product. taxing the production of the good to reduce the amount produced. regulating production of the good to reduce the amount produced.

subsidizing production of the good to increase the amount produced.

Governments can increase the consumption of a product that creates positive externalities by taxing the production and consumption of the product. subsidizing the production of the product so that the supply is increased and market price is reduced. convincing everyone to consume the product. assigning property rights to the producers of the product.

subsidizing the production of the product so that the supply is increased and market price is reduced.

To calculate the revenue government receives when a tax is imposed on a good, multiply the after-tax equilibrium price by the after-tax quantity. pre-tax equilibrium price by the pre-tax quantity. tax by the pre-tax quantity. after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity. tax by the after-tax quantity.

tax by the after-tax quantity.

To calculate the revenue government receives when a tax is imposed on a good, multiply the tax by the pre-tax quantity. after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity. after-tax equilibrium price by the after-tax quantity. pre-tax equilibrium price by the pre-tax quantity. tax by the after-tax quantity.

tax by the after-tax quantity.

Marginal cost is - the difference between the lowest price a firm would have been willing to accept and the price it actually receives. - the additional cost to a firm of producing one more unit of a good or service. - the average cost of producing a good or service. - the total cost of producing one unit of a good or service.

the additional cost to a firm of producing one more unit of a good or service.

Rational ignorance means ignorance is rationed. the information is unavailable. the benefit from some information is not worth the cost of collecting it. some people do not understand rationality.

the benefit from some information is not worth the cost of collecting it.

The incidence of a per- unit tax on a good is identical for buyers and sellers of the good if: the buyers and sellers of the good are equally sensitive to price changes. the market demand curve is horizontal. the elasticity of market demand exceeds the elasticity of market supply. the market supply curve is flatter than the market demand curve.

the buyers and sellers of the good are equally sensitive to price changes.

The deadweight loss of taxation on a good is higher if ________. a progressive tax system is practiced the demand or the supply of the good is relatively price elastic there is only one seller in the market a low rate of tax is imposed on the sale of the good

the demand or the supply of the good is relatively price elastic

The tax incidence on buyers is higher if ________. the number of sellers in a market is larger than the number of buyers the buyers and sellers of a good are equally sensitive to price changes the elasticity of the market supply curve is higher than the elasticity of the market demand curve the elasticity of the market demand curve is higher than the elasticity of the market supply curve

the elasticity of the market supply curve is higher than the elasticity of the market demand curve

If a tax is imposed on a good,________. the equilibrium quantity of the good in the market falls producer surplus increases consumer surplus increases the quantity of the good traded in the market increases

the equilibrium quantity of the good in the market falls

A fireworks show has been arranged in a park. The ticket for the show is $5 but only 40% of the tickets get sold as spectators can watch the show without entering the park. This is an example of ________. the paradox of thrift the free-rider problem the paradox of plenty the tragedy of the commons

the free-rider problem

The marginal income tax rate applies to the income of the highest income U.S. taxpayers. the income in the highest tax bracket reached. all income earned by a family. the income received by people above the national average.

the income in the highest tax bracket reached.

The production of steel in a factory generates a negative externality. A per-unit tax on the factory that equals ________ of steel production will internalize the externality entirely. the marginal external benefit the marginal private cost the marginal social cost the marginal external cost

the marginal external cost

A positive externality causes the marginal private benefit to exceed the marginal social cost of the last unit produced. the marginal social benefit to be less than the marginal private cost of the last unit produced. the marginal social benefit to be equal to the marginal private cost of the last unit produced. the marginal social benefit to exceed the marginal private cost of the last unit produced.

the marginal social benefit to exceed the marginal private cost of the last unit produced.

In a progressive tax system, ________. the average tax rate equals the marginal tax rate the marginal tax rate exceeds the average tax rate the average tax rate is equal for all taxpayers the average tax rate exceeds the marginal tax rate

the marginal tax rate exceeds the average tax rate

If the production of a good involves positive externalities, ________. the average cost of production of the good in the long run is zero the market price of the good is higher than its optimal price the market price of the good is lower than its optimal price the variable cost of production of the good is zero

the market price of the good is lower than its optimal price

Willingness to pay measures the maximum price that a buyer is willing to pay for a good. the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good.

the maximum price that a buyer is willing to pay for a good. Because willingness to pay= value= height of demand curve

The price system allocates resources efficiently EXCEPT when the production of a good affects parties other than its buyers and sellers. resources are utilized to produce the highest-valued goods and services. consumers decide they want more of a good. voluntary exchange exists.

the production of a good affects parties other than its buyers and sellers.

If negative externalities are present in a market, ________. the price charged in the market is higher than the socially optimal price the average cost of production exceeds the marginal cost of production at all output levels the quantity supplied in the market is larger than the socially optimal level the marginal social cost of production is lower than the marginal private cost

the quantity supplied in the market is larger than the socially optimal level

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is minimized. the sum of consumer surplus and producer surplus is at a maximum. the sum of the benefits to firms is equal to the sum of the benefits to consumers. economic surplus is minimized.

the sum of consumer surplus and producer surplus is at a maximum.

Overfishing leading to a rapid depletion of the stock of fish is an example of ________. the free-rider problem the tragedy of the commons the prisoners' dilemma the paradox of thrift

the tragedy of the commons

Haiti was once a heavily forested country. Today, 80 percent of Haiti's forests have been cut down, primarily to be burned to create charcoal. The reduction in the number of trees has lead to devastating floods when it rains heavily. This is an example of tragic externalities. the tragedy of the commons. human greed. the consequences of not having a market economic system.

the tragedy of the commons.

A price ceiling refers to ________. the highest price that a consumer is willing to pay for a good the lowest price that a producer is willing to accept for a good the lower limit on the price of a good the upper limit on the price of a good

the upper limit on the price of a good

Taxes may cause deadweight losses because they transfer purchasing power from sellers to the government. they transfer purchasing power from buyers to the government. they increase consumer surplus at the expense of producer surplus. they lower the surplus in the market.

they lower the surplus in the market.

If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered social costs of the pollution. transactions costs. marginal benefits. external costs.

transactions costs.

The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called implicit costs. explicit costs. transactions costs. enforcement costs.

transactions costs.

One difference between the demand for a private good and that for a public good is that with a private good, each consumer chooses the quantity she wants to consume but with a public good, each consumer chooses the price she is willing to pay for a fixed quantity. with a private good, each consumer receives different amounts of benefit from consuming the product but with a public good, every consumer realizes the same amount of benefit from consuming the product. with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity. the marginal benefit from consuming the last unit of a public good always exceeds the marginal benefit from consuming the last unit of a private good because there are externalities in the consumption of the public good.

with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity.

After a tariff is imposed, consumers must pay a price equal to the world market price plus the tariff. domestic equilibrium price when there is no trade plus the tariff. world market price. domestic equilibrium price when there is no trade. world market price less the tariff.

world market price plus the tariff.

A tariff makes the total economy better off because it increases the domestic production of the good. worse off because it decreases both domestic consumer surplus and domestic producer surplus. worse off because it creates a deadweight loss. better off because it decreases the deadweight loss from international trade. worse off because it creates revenue for the government.

worse off because it creates a deadweight loss.

For-profit producers will produce only private goods because buyers will be willing to pay for the goods since the benefits are excludable. markets exist for private goods but not for public goods. all external benefits can be internalized using market prices. the cost of production can be easily determined.

buyers will be willing to pay for the goods since the benefits are excludable.

Which of the following is an example of a quasi-public good? stock of knowledge in the public domain crime prevention organic apples cable television

cable television

If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT requiring a payment, such as key money, in addition to the rent. refusing to rent to individuals on the basis of sex, race, or some other attribute. charging the equilibrium rent. the creation of a black market. increased search activity.

charging the equilibrium rent.

The "invisible hand" refers to the notion that no matter what allocation method is used, the resulting production is efficient. competitive markets send resources to their highest valued uses. government intervention is necessary to ensure efficiency. marginal benefit decreases as more is consumed. marginal cost increases as more is produced.

competitive markets send resources to their highest valued uses.

A study by the Congressional Budget Office (CBO) regarding the corporate income tax included the following statement: "A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but the money must come from somewhere..." The comments that followed this statement argued that corporations pass on some of the burden of the tax to investors in the company, to workers, and to consumers. the corporate income tax is a reliable source of revenue because corporations cannot avoid paying the tax. it is necessary to retain the tax because it is based on the ability-to-pay principle. the tax is more progressive than the individual income tax.

corporations pass on some of the burden of the tax to investors in the company, to workers, and to consumers.

If there are external costs of production not accounted for, then marginal cost is greater than marginal social cost. cost is less than marginal social cost. social cost is zero. cost equals marginal social cost.

cost is less than marginal social cost.

A rent ceiling set below the equilibrium rent eliminates discrimination by landlords. results in all renters and potential renters being better off. ensures that landlords earn a reasonable rate of profit on apartments. creates a situation in which the quantity demanded of housing is greater than quantity supplied. ensures the availability of enough low-rent apartments in a city.

creates a situation in which the quantity demanded of housing is greater than quantity supplied.

A rent ceiling set below the equilibrium rent ensures that landlords earn a reasonable rate of profit on apartments. creates a situation in which the quantity demanded of housing is greater than quantity supplied. eliminates discrimination by landlords. ensures the availability of enough low-rent apartments in a city. results in all renters and potential renters being better off.

creates a situation in which the quantity demanded of housing is greater than quantity supplied.

A price ceiling leads to a(n) ________ if below equilibrium price. decrease in market demand decrease in total surplus increase in producer surplus increase in social well-being

decrease in total surplus

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices. supply demand production possibilities marginal cost

demand Because the definition of demand curve.

The government proposes a tax on imported champagne. Buyers will bear the entire burden of the tax if the demand curve for imported champagne is horizontal. demand curve for imported champagne is vertical. demand curve is downward sloping and the supply curve is upward sloping. supply curve for imported champagne is vertical.

demand curve for imported champagne is vertical.

Tax incidence is the burden sellers have to absorb from a tax on goods and services. division of the burden of a tax between the buyer and the seller. deadweight loss created by a tax. burden buyers have to absorb from a tax on goods and services. lost revenue the government endures from goods and services that are not taxed.

division of the burden of a tax between the buyer and the seller.

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized, then costs are minimized. economic efficiency is achieved. maximum deadweight loss occurs. profits are maximized.

economic efficiency is achieved.

The amount of a tax paid by the sellers will be larger the more ________ the demand and the more ________ the supply. inelastic; inelastic elastic; inelastic elastic; elastic inelastic; elastic

elastic; inelastic

Which of the following is an example of a common resource? lions in a zoo public transportation a college education elephants in the wild

elephants in the wild

Which of the following is not an example of rent-seeking behavior? lobbying the government to impose tariffs on certain imported products competition for the exclusive right to import a product competition for subsidies engaging in aggressive advertising that slams a competitor's product

engaging in aggressive advertising that slams a competitor's product

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set equal to the marginal external cost at the economically efficient level of pollution. equal to the amount of the deadweight loss created in the absence of a pollution tax. equal to the marginal private cost of production at the economically efficient level of pollution. at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.

equal to the marginal external cost at the economically efficient level of pollution.

In a housing market with no rent ceilings, the equilibrium rent is that for which the quantity of apartments demanded is greater than the quantity supplied. equals the quantity supplied. is less than the quantity supplied. might be greater than, equal to, or less than the quantity supplied depending on whether the supply curve is upward sloping, horizontal, or vertical. None of the above answers is correct because without rent ceilings there is no equilibrium rent.

equals the quantity supplied.

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are the result of the voting paradox. examples of rent seeking. irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation. illegal.

examples of rent seeking.

When the government taxes a firm that generates external costs, the firm will produce the same number of units of output as before the tax was imposed to continue maximizing profits. more units of output than before the tax was imposed in order to continue maximizing profits. fewer units of output than before the tax was imposed in order to continue maximizing profits. either more or fewer units of output than before the tax was imposed depending upon what happens to the profit-maximizing level of output.

fewer units of output than before the tax was imposed in order to continue maximizing profits.

When the demand for a product is more elastic than the supply consumers pay the majority of the tax on the product. firms pay the entire tax on the product. consumers pay the entire tax on the product. firms pay the majority of the tax on the product.

firms pay the majority of the tax on the product.

What does the phrase "internalizing an external cost" mean? limiting the extent to which domestic firms can outsource production forcing producers to factor into their production costs the cost of the externalities created in the production of their output finding a way to address cross-border pollution prohibiting economic activities that create externalities

forcing producers to factor into their production costs the cost of the externalities created in the production of their output

Which of the following is an example of a product that is nonexcludable and rivalrous? automobiles flu vaccinations free concert (with limited seating) in a park national defense

free concert (with limited seating) in a park

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.3newf190624191138/f1q8g1.jpg In the above figure, a price ceiling of $4 would result in a shortage in the long run. result in a surplus in the short run but have no effect in the long run. result in a surplus in the long run. have no effect.

have no effect.

The Coase theorem states that a free-market equilibrium is the best solution to address externalities. assigning property rights is the only thing the government should do in a market economy. government intervention is always needed if externalities are present. if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.

if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.

Which of the following situations will arise in the domestic market following the imposition of a tariff? imports decrease, domestic production increases, prices decrease imports increase, domestic production decreases, prices decrease imports decrease, domestic production increases, prices increase imports increase, domestic production increases, prices increase

imports decrease, domestic production increases, prices increase

A tariff placed on a foreign good will reduce the price of a competing domestic good. increase the quantity sold of both the foreign and competing domestic good. increase the price of a competing domestic good. reduce the quantity sold of both the foreign and competing domestic good.

increase the price of a competing domestic good.

Given job losses in U.S. manufacturing, some Americans have called for an increase in tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing produced in China, the price of clothing in America would first decrease then increase. first increase then decrease. increase. decrease. not change.

increase.

Assume that production from an electric utility caused acid rain. If the government imposed a tax on the utility equal to the cost of the acid rain, the government's action would internalize the externality. be an example of supply-side economic policy. result in a marginal social benefit greater than the marginal cost of the electricity. externalize the externality.

internalize the externality.

When there is a negative externality, the private cost of production ________ the social cost of production. is greater than eliminates is less than is equal to

is less than

The more elastic the demand for a good, the less a sales tax raises the price paid by buyers. less a sales tax lowers the price paid by buyers. more a sales tax raises the price paid by buyers. more a sales tax lowers the price paid by buyers.

less a sales tax raises the price paid by buyers.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.100825171227/f1q4g1.jpg Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 8,000 pounds of pecans are sold producer surplus equals consumer surplus. marginal benefit is equal to marginal cost. the deadweight loss is equal to economic surplus. the marginal benefit of each of the 8,000 pounds of pecans equals $9.

marginal benefit is equal to marginal cost.

The producer surplus is found by subtracting the ________ and then adding the difference for all units sold. marginal cost from marginal benefit price from marginal cost deadweight loss from the price marginal cost from price marginal benefit from total benefit

marginal cost from price

A supply curve shows quantities supplied at various prices. It also shows the marginal cost of production. producer surplus, which is equal to the slope of the supply curve. marginal benefit of the good. total cost of production. total profit the firm earns at a given level of output.

marginal cost of production.

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________. private cost; external cost marginal private benefit; marginal external benefit marginal social benefit; marginal external benefit marginal external benefit; marginal social benefit

marginal private benefit; marginal external benefit

Producing paper creates pollution. There is no externality in the consumption of paper. The efficient quantity of paper is when the marginal social cost of the pollution from making paper is equal to zero. marginal social benefit of paper is equal to zero. marginal private cost of the pollution from making paper is equal to zero. marginal social benefit of paper is equal to the marginal social cost of paper.

marginal social benefit of paper is equal to the marginal social cost of paper.

When economists say that a good is nonrival in consumption, they mean that: no one wants the good. more than one person can enjoy the good at the same time. the good is widely available. everyone wants the good.

more than one person can enjoy the good at the same time.

In order to have an impact, a price ceiling must lie below the free market equilibrium price. must coincide with the free market equilibrium price. must be high enough for firms to earn a profit. must lie above the free market equilibrium price.

must lie below the free market equilibrium price.

The Coase theorem relies on internalizing externalities through ________. the imposition of corrective taxes the provision of corrective subsidies negotiations between the parties involved social enforcement mechanisms

negotiations between the parties involved

The tragedy of the commons occurs because some goods are ________ in consumption. non-rival non-excludable but rival non-rival and non-excludable excludable

non-excludable but rival

A radio signal broadcast through the air is ________ in consumption, and listeners are ________. nonrival; nonexcludable rival; excludable nonrival; excludable rival; nonexcludable

nonrival; nonexcludable

Private producers have no incentive to provide public goods because production of huge quantities of public goods entails huge fixed costs. once produced, it will not be possible to exclude those who do not pay for the good. they cannot avoid the tragedy of the commons. the government subsidy granted is usually insufficient to enable private producers to make a profit.

once produced, it will not be possible to exclude those who do not pay for the good.

A good is non-rival in consumption if ________. one person's use of the good does not preclude consumption by others people cannot be prevented from using it the demand for the good increases with an increase in the consumer's income the government can regulate its production

one person's use of the good does not preclude consumption by others

A proportional tax is a tax for which people with lower incomes pay a lower percentage of their incomes in tax than do people with higher incomes. pay a higher percentage of their incomes in tax than do people with higher incomes. pay the same amount of taxes as people with higher incomes pay. pay the same percentage of their incomes in tax as do people with higher incomes.

pay the same percentage of their incomes in tax as do people with higher incomes.

If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's consumers end up consuming more of the good than they otherwise would. paying a higher price for the good than they otherwise would. paying a lower price for the good than they otherwise would. having a higher standard of living than they otherwise would.

paying a higher price for the good than they otherwise would.

The "tragedy of the commons" refers to the phenomenon where people overuse a common resource. people do not internalize an externality. individuals are free riders. there is rivalry in consumption.

people overuse a common resource.

The tragedy of the commons is the absence of incentives to prevent overuse and depletion of a common resource. correctly measure the marginal social benefit from a common resource. discover the common resource. prevent under use of the common resource.

prevent overuse and depletion of a common resource.

Graphically, producer surplus is the area under the price and above the supply curve, up to the relevant quantity. price and above the quantity axis, up to the relevant quantity. demand curve and above the supply curve, up to the relevant quantity. demand curve and above the price, up to the relevant quantity. price and above the demand curve, up to the relevant quantity.

price and above the supply curve, up to the relevant quantity.

The price of a gallon of gasoline in Bonland is $3.20. However, just before the election, the government decides to fix the price of gasoline at $2.80 per gallon. This is an example of a ________. positive externality price ceiling negative externality price floor

price ceiling

Producer surplus is the ________ summed over the quantity produced. - marginal cost of the good minus the opportunity cost of producing it - price of the good minus the marginal cost of producing it - marginal benefit of the good minus its marginal cost - marginal benefit of the good minus its price - None of the above answers is correct.

price of the good minus the marginal cost of producing it

The cost borne by a producer in the production of a good or service is called internal cost. social cost. public cost. private cost.

private cost.

A market supply curve reflects the external costs of producing a good or service. private costs of producing a good or service. social costs of producing a good or service. external benefits of producing a good or service.

private costs of producing a good or service.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.6n0709171306/f1q3g1.jpg Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.Refer to Figure 4-3. What is the value of consumer surplus at the equilibrium price of $15? $60 $120 $180 $240

$240

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%205.51006161208/f1q4g1.jpg Figure 4- 8 shows the market for beer. The government plans to impose a unit tax in this market. Refer to Figure 4 -8. The price buyers pay after the tax is $7. $20. $22. $27.

$27.

Suppose that the price of a coffee mug is $2. Lee's marginal cost of producing coffee mugs $0.50 for the first mug, Tammy's marginal cost of producing coffee mugs is $1 for the second mug, Stan's marginal cost of producing coffee mugs is $1.50 for the third mug, Joy's marginal cost of producing coffee mugs is $2 for the fourth mug, and Jody's marginal cost of producing coffee mugs is $3 for the fifth mug. In equilibrium, what is the producer surplus from producing coffee mugs? $0 $2 $3 $6

$3 Because producer surplus= revenue- cost

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys? $3 $2 $10 $9

$3 Because the total of the consumer surplus is $3.

Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good. $160 for 5 units $200 for 1 unit $200 for 3 units $300 for 1 unit

$300 for 1 unit

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%205.51006161208/f1q3g1.jpg Refer to Figure 4 -8. How much of the tax is paid by buyers? $2 $5 $7 $12

$5

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%204.70908161159/f1q14g1.jpg Figure 4-1 shows Arnold's demand curve for burritos. Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 3 burritos? $1.50 $6.00 $7.00 $10.00

$6.00 Because you add the marginal benefit of each burrito together to get $6 value.

Demand /// Supply P = 80 - QD /// P = 50 + 1/2 QS QD = 80 - P /// QS = 2P - 100 Refer to Table 4-6. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. What are the equilibrium price and quantity (in thousands) for Chef Ernie's sushi? $60 and 20 thousand $80 and 80 thousand $40 and 50 thousand $50 and 100 thousand

$60 and 20 thousand

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is $325. $200. $125. $75.

$75. Because using the CS formula you get $75 CS.

The marginal social benefit from the production of the last unit of a good is $4,800. If the willingness to pay for that unit is $3,900, what is the external benefit from its production? $3,800 $4,100 $900 $8,700

$900

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz8.2newf190620191447/f1q9g1.jpg The figure above shows the market for college education in the United States. If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is ________. 13 million students per year; 16 million students per year 10 million students per year; 14 million students per year 14 million students per year; 10 million students per year 10 million students per year; 13 million students per year 14 million students per year; 16 million students per year

10 million students per year; 14 million students per year

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.80710191855/f1q10g1.jpg Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, this country will import ________ leather wallets. 50 100 150 200

100

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz8.2newf190620191447/f1q10g1.jpg The figure above shows the market for annual influenza immunizations the United States. The efficient quantity of immunizations is 14 million per year. 10 million per year. 22 million per year. less than 10 million per year. between 14 and 21 million per year.

22 million per year.

Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The efficient number of police officers in Broomfield is 3. 6. 2. 4.

3.

Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $36, the efficient quantity of satellites is 1. 2. 3. 4.

4

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%204.70908161159/f1q15g1.jpg Figure 4- 1 shows Arnold's demand curve for burritos. Refer to Figure 4 -1. If the market price is $1.00, what is the maximum number of burritos that Arnold will buy? 1 2 3 4

4 Because the marginal cost doesn't exceed marginal benefit until after 4.

The Waco Kid's Cowboy Hats/Marginal Cost(dollars) 1st hat $24 2nd hat 30 3rd hat 38 4th hat 46 Refer to Table 4 -3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $50, how many hats will be produced? 0 1 2 4

4 Because the marginal cost stays below the price

The appropriate charge for trash disposal should be set by The opportunity cost of using the landfill, The cost of the trucks and labor needed to haul trash away, The impact of buried plastic bottles that only slowly degrade. All of the above. A and B above.

A and B above.

The key problem(s) with externalities is that Private costs do not equal social costs. Private benefits do not equal social benefits. The government is often inefficient. All of the above. A and B above.

A and B above.

Which of the following is an example of a public good? A radio broadcast A training program for a company's employees A magazine subscription A house in a tourist destination

A radio broadcast

Which of the following statements refers to rent seeking? "There is an opportunity cost whenever the federal government spends tax revenue. For example, an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program." "Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws." "The role of the federal government in the U.S. economy grew significantly after the Great Depression. Government spending and taxes are a much greater proportion of total income today than they were in 1929." "The federal government should spend more money on programs that help low income citizens and less money on national defense."

"Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws."

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is $150. $75. $37.50. $0.

$0 Because total consumer surplus= marginal benefit - cost

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.100825171227/f1q2g1.jpg Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.Refer to Figure 4-3. What is the value of the deadweight loss at the equilibrium price of $15? $0 $40 $60 $100

$0 If the price is in equilibrium there would be no deadweight loss.

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.6n0709171306/f1q4g1.jpg Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.Refer to Figure 4-3. What is the total social opportunity cost at the equilibrium price of $15? $160 $1,040 $1,200 $1,440

$1,040 Because area underneath the supply curve= total social opportunity cost.

The marginal cost of producing 40 units of a public good is $200. There are two individuals in the society. Person A is willing to pay $80 for 40 units of the public good. If 40 units of the public good are provided, how much must Person B be willing to pay? $0 $80 $120 $150

$120

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz6.6n0709171306/f1q5g1.jpg Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.Refer to Figure 4-3. What is the value of producer surplus at the equilibrium price of $15? $80 $160 $240 $400

$160

If a firm produces five chairs with marginal costs of $25, $30, $40, $55, and $75, respectively, and sells them for $80 each, what is the firm's total producer surplus? $225 $80 $400 $150 $175

$175 Because total producer surplus= total revenue- total cost

John receives a marginal benefit of $80 from one missile. Nick receives a marginal benefit of $50 from one missile. Christina receives a marginal benefit of $65 from one missile. John, Nick, and Christina are the only people in the economy. What is the economy's marginal social benefit from one missile? $80 $195 $65 $50

$195

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%204.70908161159/f1q13g1.jpg Figure 4- 1 shows Arnold's demand curve for burritos. Refer to Figure 4 -1. Arnold's marginal benefit from consuming the second burrito is $1.00. $1.50. $2.00. $4.50.

$2.00. Because price at that point= marginal benefit

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz%205.51006161208/f1q5g1.jpg Figure 4- 8 shows the market for beer. The government plans to impose a unit tax in this market. Refer to Figure 4 -8. For each unit sold, the price sellers receive after the tax (net of tax) is $20. $22. $27. $32.

$20.

Suppose that Tim is willing to pay $50 for a dozen of roses for Kim on Valentine's Day. If he actually pays $2.50 per rose for the 12 roses, his total consumer surplus is: $50. $30. $20. $12.

$20. Because total consumer surplus= marginal benefit - cost

https://tamu.blackboard.com/courses/1/ECON.202.599.2031/ppg/quiz7.5newf190618192145/f1q8g1.jpg In the above figure, the price received by the seller before the tax is ________ per CD, and the price received and kept by the seller after the tax is ________ per CD. $20; $20 $20; $10 $30; $20 $30; $10

$20; $10