micro economics chapter 10

Refer to Table 10-2. What is the equilibrium quantity of output in this market? a. 4 units b. 5 units c. 6 units d. 3 units

a, 4 units

Refer to Table 10-4. The market equilibrium quantity of output is a. 6 units. b. 5 units. c. 4 units. d. 3 units.

a, 6 units

Two types of private solutions to the problem of externalities are a. charities and subsidies. b. the Golden Rule and taxes. c. taxes and subsidies. d. charities and the Golden Rule.

a, charities and subsidies

Refer to Figure 10-4. The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the market for antibiotics is shown in a. Graph (b) only. b. Graph (a). c. Graph (c) only. d. Graphs (b) and (c).

a, graph b only

An externality is the uncompensated impact of a. one person's actions on the well-being of a bystander. b. society's decisions on the well-being of society. c. society's decisions on the poorest person in the society. d. a person's actions on that person's well-being.

a, one persons actions on the well being of a bystander

Refer to Figure 10-2. If all external costs were internalized, then the market's output would be a. Q2. b. Q1. c. Q4. d. Q3.

a, q2

Zaria and Hannah are roommates. Zaria assigns a $30 value to smoking cigarettes. Hannah values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem? a. Zaria pays Hannah $16 so that Zaria can smoke. b. Hannah offers Zaria $20 not to smoke. Zaria accepts and does not smoke. c. Hannah offers Zaria $15 not to smoke. Zaria accepts and does not smoke. d. Zaria pays Hannah $14 so that Zaria can smoke.

a, zaria pays hannah $16 so that zaria can smoke

Refer to Figure 10-3. What is the socially optimal quantity of output in this market? a. Between 8 and 10 units b. 10 units c. 8 units d. More than 10 units

b, 10 units

Which of the following statements about a well-maintained yard best conveys the general nature of the externality? a. A well-maintained yard conveys a negative externality because it increases the property tax liability of the owner. b. A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood. c. A well-maintained yard conveys a positive externality because it increases the home's market value. d. A well-maintained yard cannot provide any type of externality.

b, a well maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood

Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct? a. The current output level is inefficiently high. b. At the current output level, the marginal social benefit exceeds the marginal private benefit. c. At the current output level, the marginal social cost exceeds the marginal private cost. d. A per-shot tax could turn an inefficient situation into an efficient one.

b, at the current output level, the marginal social benefit exceeds the marginal private benefit

Which of the following is NOT a way of internalizing technology spillovers? a. Subsidies b. Taxes c. Patent protection d. Industrial policy

b, taxes

Refer to Table 10-5. If the government wanted to eliminate exactly 11 units of pollution, which of the following fees per unit of pollution would achieve that goal? a. $99 b. $106 c. $87 d. $75

c, $87

Refer to Figure 10-5. The socially optimal quantity of output is a. 420 units, since the value to the buyer of the 420th unit is equal to the cost incurred by the seller of the 420th unit. b. 240 units, since the value to society of the 240th unit is equal to the cost incurred by the seller of the 240th unit. c. 420 units, since the value to society of the 420th unit is equal to the cost incurred by the seller of the 420th unit. d. 240 units, since the value to the buyer of the 240th unit is equal to the cost incurred by the seller of the 240th unit.

c, 420 units, since the value to society at the 420th unit is equal to the cost incurred by the seller of the 420th unit

According to the Coase theorem, private parties can solve the problem of externalities if a. the number of parties involved is sufficiently large. b. the initial distribution of legal rights favors the person being adversely affected by the externality. c. the cost of bargaining is small. d. property rights aren't clearly defined

c, the cost of bargaining is small

Refer to Table 10-3. The table represents a market in which a. there is a negative externality. b. The answer cannot be determined from inspection of the table. c. there is a positive externality. d. there is no externality.

c, there is a positive externality

Refer to Figure 10-2. This market is characterized by a. a positive externality. b. a price control. c. government intervention. d. a negative externality.

d, a negative externality

Which of the following statements is not correct? a. Corrective taxes allocate pollution to those producers who face the highest cost of reducing pollution. b. Corrective taxes provide incentives to develop cleaner technologies. c. Corrective taxes can be used to place a price on the right to pollute. d. Corrective taxes require the government to set a target level of pollution.

d, corrective taxes require the government to set a target level of pollution

Most economists prefer corrective taxes to regulation as a way to correct the problem of pollution because the market-based solution a. is less efficient. b. can result in a greater increase in pollution. c. lowers revenue for the government. d. is less costly to society.

d, is less costly to society

If a sawmill creates too much noise for local residents, a. noise restrictions will force residents to move out of the area. b. a sense of social responsibility will cause owners of the mill to reduce noise levels. c. the government should avoid intervening because the market will always allocate resources efficiently. d. the government can raise economic well-being through noise-control regulations.

d, the government can raise economic well being through noise control regulations

Refer to Table 10-4. The table represents a market in which a. there is a positive externality. b. The answer cannot be determined from inspection of the table. c. there is no externality. d. there is a negative externality.

d, there is a negative externality