Econ 2010
Answer: C
350
Answer: A
A
Answer: B
A prime example of a tragedy of the commons is a severe traffic jam on a freeway. The freeway is open to all, but since it is open to all it is so congested, making the public "good" of the freeway less useful. Only applies to common resources, not public goods.
Answer: C
Anyone can go to the emergency room if something is wrong with them and they cannot be turned away even if they do not have health insurance. It is the hospitals duty to help the patient and it is a public good that is available to everyone
Answer: B
B
Answer: C
By making improvements to your house, you increase your property's value, consequently increasing the whole street's value. This is a positive externality because other's benefit from your action
Answer: C
C
Answer: C
Firms have no incentive to respond to advertising
Answer: B
His eating cereal and driving could result in an accident to an unwilling third party which is a cost and therefore the marginal social cost increases, shifting the supply curve to the left.
Answer: B
His vaccination creates an external benefit because although his sister didn't get a flu shot herself, she indirectly benefits from Lin's flu shot because since he won't get the flu, she likely won't either.
Answer: B
If everything was a public good, people would be able to free-ride more
Answer: C
It is usually less than because not as many people participate in the private consumption of services that generate positive externalities
Answer: A
More labor
Answer: C
Not enough info
Answer: C
Satellite radio service is the best example of a public good with exclusion because the good is exclusive to some consumers, but non-rival
Answer: C
Snowplowing the streets, because it is difficult to exclude neighbors from benefiting from the snow plowing service, and when the good is consumed, it doesn't reduce its availability to others.
Assume that the marginal utilities for the first three units of a good consumed are 200, 150, and 125, respectively. The total utility when two units are consumed is:
a) 150 b) 200 c) 350 d) 475
Which of the following is the best example of a public good with exclusion?
a) A fireworks display that can be seen miles away b) Fire protection services offered by the city c) Satellite radio service d) A public lake
Which of the following would be the best example of a free-rider?
a) A roommate asking you for a ride to school but won't help out with gas. b) A panhandler who sneaks onto the subway without paying. c) A person without health insurance visiting an emergency room because they can't be turned away d) A neighbor who plants vegetables in her garden and allows others to help themselves to the harvest.
Which of the following best represents a tragedy of the commons?
a) A shopping mall with virtually no shoppers inside. b) A severe traffic jam on the freeway. c) A fire that burns an entire apartment complex. d) A ski resort closing due to lack of snow.
Which of the following is not a common method by which government controls pollution?
a) Issuing tradable permits to pollute. b) Implementing a tax on pollution emitted. c) Advertising the harmful effects of pollution to encourage firms to pollute less. d) Setting a strict limit on the amount of pollution each firm can generate.
Suppose the production of widgets generates an unpleasant smell to households that are located nearby, but when the widgets are consumed people nearby the consumer also benefit. Is the total surplus generated by the free market outcome smaller than the socially optimal outcome?
a) Yes b) No c) Not enough information
Which of the following is an example of a positive externality?
a) buying a gift for your sister b) getting a deal at the local store c) making improvements to your house d) none of these choices are examples of a positive externality
Which of the following would be the best example of a public good?
a) clean water at the public lake b) a community park c) snowplowing the streets d) public school
When Lin receives a flu vaccination, it reduces the chance of him receiving the flu as well as the chance that his sister will get sick. His flu vaccination creates a(n):
a) external cost b) external benefit c) marginal social cost d) deadweight loss
Because Dennis always eats cereal while he drives, he is generating a _____ to others, resulting in a shift of the supply curve to the _____.
a) external cost; right b) external cost; left c) external benefit; right d) external benefit; left
The equilibrium wage rate is $18. A perfectly competitive firm sells widgets for $8. Suppose the marginal product of the sixth unit of labor is three widgets and the marginal product of the ninth unit of labor is two widgets. This firm should hire:
a) fewer than six units of labor b) more than nine units of labor c) more than six but fewer than nine units of labo d) six units of labor e) nine units of labor.
The private consumption of services that generate positive externalities, such as getting a college education, is usually _____ the socially optimal level of consumption.
a) greater than b) equal to c) less than d) unrelated to
Generally, the amount of public goods available in a society is _____ what is actually desired.
a) greater than b) less than c) exactly d) either exactly or greater than
An increase in the price of good X while holding income and the price of good Y constant will:
a) have a positive substitution effect, leading the consumer to increase the consumption of good X because of the increase in the marginal utility per dollar spent on good X. b) have a negative substitution effect, leading the consumer to decrease consumption of good X because of the decrease in the marginal utility per dollar spent on good c) cause the consumer to substitute away from good Y toward good X. d) cause the consumer to purchase more units of good X because of the income effect.
An increase in the price of good X while holding income and the price of good Y constant will:
a) increase the marginal utility provided by good X. b) increase the marginal utility per dollar spent on good Y c) decrease the marginal utility per dollar spent on good X. d) reduce the individual's preference for good X.
Suppose the marginal cost of hiring an additional unit of labor is $10 and the value of the marginal product from hiring this additional unit of labor is $12. To maximize profit, this firm should hire:
a) more labor b) less labor
When an individual's labor supply curve is backward- bending (that is, downward-sloping), this implies that the individual's income effect is:
a) stronger than the individual's substitution effect. b) weaker than the individual's substitution effect
The marginal productivity theory of income distribution provides a moral justification for the prevailing income distribution.
a) true b) false
Answer: B
false