economics

Suppose there are 100 homeowners in a neighborhood that needs street repairs. Each homeowner values street repairs at $3,000. The total cost of street repairs is $200,000. Which of the following is true? A. It is inefficient to repair the street. B. Voluntary contributions will raise enough funds to repair the street. C. It is efficient for the government to repair the street and tax each homeowner $2,000. D. It is efficient for the government to repair the street and subsidize each homeowner $2,000.

C

Which of the following is not an argument in favor of the market provision of public goods? A. Price signals encourage efficient resource allocation. B. Companies such as YouTube and Google offer a $0 fee but earn revenue through advertisements C. The private sector output for a public good will be lower than the public sector output. D. Public production requires taxes that come with a deadweight loss.

C

10. Some economists argue that if privately owned firms were required to pay the social costs of their pollution, the result would be: A. each would create less pollution B. each would lower production to decrease pollution levels C. their supply curves will represent all of those social costs D. the price of goods will rise and a and b above

D

According to the Coase theorem, private parties can solve an externality problem if ______________. A. each affected party has equal power in the negotiations B. the property right to the disputed resource is assigned to the party affected by the externality C. there are large numbers of people affected D. there are clear property rights and no transaction costs

D

In the case of public goods, if the government does not provide them, then ___________. A. quantity produced will always be zero B. there will be forced riders C. everyone will be a free rider D. social pressures and personal appeals can reduce the number of free riders

D

Property rights are the legal rights of ownership on which others are ___________________. A. allowed to infringe by paying the property owner's pollution tax B. able to enforce use of pollution-control technologies C. able to specify allowable quantities of pollution D. not allowed to infringe without paying compensation

D

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 _____________. A. unexcludable B. free rider C. public good D. nonexcludable

D

When the quantity of environmental protection is low so that pollution is extensive, then there are usually _______________ to reduce pollution and the ___________________. A. a few inexpensive and easy ways; average benefit are slightly higher B. a lot of expensive and innovative methods; marginal benefits are quite high C. only a few expensive and innovative methods; average benefits are higher D. a lot of cheap and easy ways; marginal benefits of doing so are quite high

D

Which of the following illustrates the concept of an external cost? A. Margaret purchases all of her food and clothing from a big city in the next county. B. Nicholas frequently buys raw materials for his small business by using his bank's line of credit. C. Aisha leaves a balance on her credit card, causing her to accrue interest charges. D. Raymond cannot open his windows because he lives downwind from a chemical factory.

D

Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology? A. intellectual property rights B. government research and development grants C. cooperative research ventures between companies D. patents, copyrights, and each of the above

D

With common ownership ______________. A. all owners have the right to use the resource and cannot exclude others B. the only way to benefit is to consume the resource before someone else does C. owners have an incentive to overuse the resource D. all of the above

D

11. While the U.S. command-and-control environmental regulations initiated in the 1970s have been effective at reducing pollution, some economists have difficulty with the legislation because ___________________. A. it often requires different pollution-control technology for each polluter. B. it usually requires different standards for all current and potential polluters. C. it is full of fine print and exceptions, and costly for some firms to comply with. D. it is not subject to compromises in the political process and all of the above.

C

12. Market-oriented environmental tools _________________ for firms to take the social costs of pollution into account and _______________ in reacting to these incentives. A. draw distinctions; lower the social costs incurred B. lack incentives; prohibit firms from having flexibility C. create incentives; allow firms some flexibility D. specify particular technology; lower the social costs incurred

C

7. Around the world, the cities with the dirtiest air and water are typically found in ____________. A. high-income countries like France and the US B. Australia C. low-income countries in Africa and Asia D. desert areas

C

A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms ___________________. A. a permanent monopoly over all their inventions that never expires B. the option to fund all R&D projects through colleges or universities C. a reduction in corporate taxes based on amount of R&D performed D. assurance that antitrust authorities challenge cooperative R&D efforts

C

An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a ___________. A. tax evader B. excludable C. free rider D. nonexcludable

C

Education is often considered a positive externality because more education is associated with ___________. A. better health outcomes for the population B. lower levels of crime C. a more stable, democratic government D. all of the above

D

13. If a glass manufacturer has only a few _____________ of reducing pollutants, it will ________________. A. costly ways; end up paying the pollution tax B. inexpensive ways; incur the pollution tax instead C. costly ways; do so to minimize its pollution taxes D. inexpensive ways; buy the most expensive technology

A

A pollution charge is a form of tax imposed on _________________. A. the quantity of pollution that a firm emits B. pollution control technologies C. every economy in the world D. low-income market-orientated industries

A

Economic reasoning suggests that ______________ can protect valuable animal populations better than _____________. A. clearly defined private property rights; a ban on hunting B. a ban on hunting; clearly defined private property rights C. pollution permits; corrective taxes D. corrective taxes; pollution permits

A

If a government chooses a system of marketable permits as its environmental managing tool, the reduction in pollution will ___________________. A. take place in the firms where it is least expensive to do so B. take place in every firm within the time set by the permit C. be initiated at the household level D. be rewarded with refundable charges

A

In order for a good to be classified as ____________, when one person uses the good, others are also able to use it. A. nonrivalrous B. unrivalrous C. unexcludable D. nonexcludable

A

It may be efficient for the government to provide public goods because ______________. A. free-riders make it difficult for private sellers to be compensated for producing the goods B. public goods are too complicated to be produced by private sellers C. production is more efficient when guided by politicians D. anything produced by the government, by definition, becomes a public good

A

Positive externalities can be dealt with by ___________ them. A. subsidizing B. taxing C. regulating D. discouraging

A

When a firm invests in new technology, the __________ that the firm receives are ________________. A. private benefits; only a portion of the overall social benefits B. social benefits; only a portion of the overall private benefits C. private benefits; about three-quarters of the economic benefits D. social benefits; about one-third of the overall private benefits

A

_________________ are externalities that cross national borders and that a single nation acting alone cannot resolve. A. International externalities B. External benefits C. Cost externalities D. Local externalities

A

A nonexcludable good ___________. A. is by definition also a collective consumption good B. usually suffers from the free rider problem C. will always lead to overproduction D. is frequently illegal

B

A person with no children (and no plans to have children) must pay taxes every year to support the local public schools. This is an example of a _____________. A. free rider B. forced rider C. tragedy of the commons D. property rights solution to a commons problem

B

A public good is a good that is ___________, and thus is difficult for market producers to sell to individual consumers. A. excludable or rivalrous B. nonexcludable and nonrivalrous C. excludable and rivalrous D. unexcludable or unrivaled

B

According to the Environmental Kuznets Curve, there is not necessarily a trade-off between _____________ and _____________. A. supply; demand B. economic output; environmental protection C. beer; wine D. education; health

B

If large numbers of individuals choose to behave as free riders, ___________. A. more of the public good will be available for paying riders B. the public good may never be provided C. public goods will quickly be privatized D. public domain technologies become more difficult to obtain

B

Once produced, nonexcludable goods are ____________. A. difficult to keep employees from stealing B. difficult to keep people from consuming without paying for them C. difficult to keep people from consuming at any price D. available to anyone at a high enough price

B

Positive externalities are _____ because their producers have no incentive to take the _____ into account. A. oversupplied; external cost B. undersupplied; external benefit C. oversupplied; external benefit D. undersupplied; external cost

B

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 ___________. A. derives more private benefits and provides less social benefit B. provides more social benefits than it derives in private benefits C. provides a marginal social benefit and derives a complete private benefit D. provides a complete social benefit and derives a marginal private benefit

B

The Morgantown city government hiring private companies to plow snow off the roads during the winter is an example of a ______________. A. negative externality B. public-private partnership C. subsidy D. club good

B

The production of paper creates dioxin emissions, which are released into the air. If the paper manufacturer does NOT bear the entire cost of dioxin emissions, then the market will ____________. A. produce less paper than is efficient B. produce more paper than is efficient C. produce the efficient quantity of paper D. stop producing paper

B

8. If no externalities of pollution exist in a particular industry, the interaction of demand and supply _______________. A. is based on benefits individuals perceive while maximizing utility B. is based on choices about production relative to total average costs C. will coordinate social costs and benefits D. shifts so supply has no relation to social costs

C

9. Why do U.S. economists commonly refer to externalities as an example of market failure? A. firms that are required to pay social costs of externalities produce more B. externalities present a case where markets consider all social costs C. externalities present a case where markets only consider some social costs D. firms avoid having to pay social costs of externalities by lowering prices

C

For a positive externality, _________________ than the social benefits. A. private benefits of an action are more B. social benefits of an action are more C. private benefits of an action are less D. social costs of an action are less

C

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, _________________________. A. it will enjoy a small temporary advantage over the competition B. it would be able to set price to compensate for development costs C. it could sell the new computers as a monopoly for at least a few years D. it would receive a government bailout if losses could drive it out of business

C

If all my neighbors have well-manicured lawns and well-maintained houses, their actions not only benefit themselves, but they generate a _____ externality because their actions _____the value of my home. A. negative; increase B. negative; decrease C. positive; increase D. positive; decrease

C