Question 1

All of the following statements are correct except

Accepted Answer

A)  knowledge about one process spills over into other segments of the economy.
B)  additional knowledge makes people more productive,and there seems to be no tendency for the additional productivity from additional knowledge to diminish.
C)  knowledge has no external benefit.
D)  knowledge might be an exception to the principle of diminishing marginal benefit.
E)  it is necessary to use public policies to ensure that those who develop new ideas have incentives to encourage an efficient level of effort.F) B) and E)
G) C) and D)

Question 2

Use the table below to answer the following questions.
Table 15.2.2
Chemical Fertilizer Market 
-Refer to Table 15.2.2.If the fertilizer market is perfectly competitive and unregulated,output is

Accepted Answer

A)  1 tonne.
B)  2 tonnes.
C)  3 tonnes.
D)  4 tonnes.
E)  5 tonnes.F) B) and D)
G) A) and B)

Question 3

Betty and Anna work at the same office in Calgary.They both must attend a meeting in Edmonton,and they have decided to drive to the meeting together.Betty is a cigarette smoker and her marginal benefit from smoking one package of cigarettes a day is $40.Cigarettes are $6 a pack.Anna dislikes cigarette smoke and her marginal benefit from a smoke-free environment is $50 a day.If Betty drives her car with Anna as a passenger,________.If Anna drives her car with Betty as a passenger,________.

Accepted Answer

A)  Anna will offer Betty an amount between $34 and $50 and Betty will not smoke;Betty does not smoke because Betty will not offer Anna a high enough price to be allowed to smoke.
B)  Betty will smoke because she owns the property rights in the car;Betty does not smoke because Betty will not offer Anna a high enough price to be allowed to smoke.
C)  Betty will smoke because she owns the property rights in the car;Betty will offer Anna $51 and Betty will smoke.
D)  Anna will offer Betty an amount between $34 and $50 and Betty will not smoke;Betty will offer Anna $51 and Betty will smoke.
E)  Betty will smoke because she is the car owner;Betty will offer Anna an amount between $34 and $50 and Betty will smoke.F) A) and C)
G) B) and D)

Question 4

Suppose that recycling rubber for running shoes creates an external benefit of $2.00 per tonne of rubber.There are no external costs.The efficient amount of rubber will be recycled when the government creates a

Accepted Answer

A)  subsidy of more than $2.00 per tonne of rubber.
B)  subsidy of $2.00 per tonne of rubber.
C)  tax of more than $2.00 per tonne of rubber.
D)  tax of $2.00 per tonne of rubber.
E)  voucher valued at $2.10 a tonne of rubber.F) A) and E)
G) A) and C)

Question 5

Use the table below to answer the following questions.
Table 15.2.1 
-Refer to Table 15.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.The table illustrates that this market has

Accepted Answer

A)  positive externalities,equal to $10 per unit.
B)  negative externalities,equal to $10 per unit.
C)  no externalities.
D)  positive externalities,equal to $20 per unit.
E)  negative externalities,equal to $20 per unit.F) A) and B)
G) A) and E)

Question 6

The Coase theorem states that

Accepted Answer

A)  patents and copyrights will solve the problem of external costs.
B)  taxes will solve the problem of external costs.
C)  global warming is hard to solve due to the prisoners' dilemma aspect of the problem.
D)  property rights are social arrangements governing ownership,use and disposal of factors of production and goods and services.
E)  if property rights exist,and the transactions costs of enforcing them are low,then private transactions are efficient and it doesn't matter who has the property rights..F) A) and D)
G) C) and D)

Question 7

Choose the statement that is incorrect.

Accepted Answer

A)  Between 2008 and 2012,carbon emissions in British Columbia remained constant.
B)  As of 2012,British Columbia applies a carbon tax of $30 per tonne of carbon emitted.
C)  British Columbia's carbon tax is revenue-neutral.
D)  Ireland has a carbon tax.
E)  A high gas tax in the United Kingdom cuts carbon emissions by inducing people to drive smaller cars and to drive less.F) A) and E)
G) All of the above

Question 8

A market economy tends to ________ goods with negative externalities and ________ goods with positive externalities.

Accepted Answer

A)  overproduce;overproduce
B)  overproduce;underproduce
C)  underproduce;overproduce
D)  underproduce;underproduce
E)  produce;consumeF) A) and E)
G) A) and D)

Question 9

Use the figure below to answer the following questions.  Figure 15.2.3
-Refer to Figure 15.2.3.A tax of ________ per tonne is necessary to achieve the efficient output of ________ tonnes of paper.

Accepted Answer

A)  $14;50
B)  $14;30
C)  $13;40
D)  $2;50
E)  $2;40F) A) and D)
G) B) and D)

Question 10

Governments use subsidies

Accepted Answer

A)  as a means of increasing government spending.
B)  when they want to increase taxes.
C)  to achieve an efficient outcome in a market with external costs.
D)  to achieve an efficient outcome in a market with external benefits.
E)  and pollution permits to achieve an efficient outcome in markets with external benefits.F) C) and D)
G) D) and E)

Question 11

Use the figure below to answer the following questions. 1. B) P4. C) below P1. D) P2. E) P3." class="answers-bank-image d-inline" rel="preload" > Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the price is

Accepted Answer

A)  P1.
B)  P4.
C)  below P1.
D)  P2.
E)  P3.F) B) and D)
G) C) and E)

Question 12

Three ways governments can encourage production of goods with external benefits are

Accepted Answer

A)  private subsidies,pollution permits,and intellectual property rights.
B)  private subsidies,pollution permits,and vouchers.
C)  intellectual property rights,pollution permits,and vouchers.
D)  taxes,emission charges,and pollution permits.
E)  private subsidies,vouchers,and intellectual property rights.F) B) and C)
G) All of the above

Question 13

The devices the government can use to achieve a more efficient allocation of resources in the presence of external benefits include all of the following except

Accepted Answer

A)  intellectual property rights.
B)  subsidies.
C)  public production.
D)  pollution permits.
E)  patents.F) B) and E)
G) A) and E)

Question 14

Use the figure below to answer the following questions. 1. C) Q2. D) Q3. E) between Q2 and Q3." class="answers-bank-image d-inline" rel="preload" > Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the quantity produced is

Accepted Answer

A)  zero.
B)  Q1.
C)  Q2.
D)  Q3.
E)  between Q2 and Q3.F) A) and B)
G) None of the above

Question 15

Consider some type of industrial pollution that generates air pollution.This industry,if left unregulated,produces

Accepted Answer

A)  more than the efficient level because producers ignore the marginal external costs.
B)  the efficient level of output.
C)  less than the efficient level because producers ignore the marginal external costs.
D)  less than the efficient level because producers ignore the marginal external benefits.
E)  more than the efficient level because producers ignore the marginal external benefits.F) C) and D)
G) A) and B)

Question 16

Use the figure below to answer the following questions. 1. C) Q2. D) Q3. E) between 0 and Q1." class="answers-bank-image d-inline" rel="preload" > Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the quantity produced is

Accepted Answer

A)  zero.
B)  Q1.
C)  Q2.
D)  Q3.
E)  between 0 and Q1.F) C) and D)
G) A) and B)

Question 17

Use the figure below to answer the following questions.  Figure 15.2.2
-Refer to Figure 15.2.2.This figure shows the demand curve,the marginal private cost curve and the marginal social cost curve of good A.What is the efficient quantity of good A?

Accepted Answer

A)  0 units
B)  5 units
C)  6 units
D)  8 units
E)  more than 8 unitsF) B) and D)
G) D) and E)

Question 18

Use the figure below to answer the following questions. 1. B) P3. C) P2. D) greater than P4. E) P4." class="answers-bank-image d-inline" rel="preload" > Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is

Accepted Answer

A)  P1.
B)  P3.
C)  P2.
D)  greater than P4.
E)  P4.F) C) and D)
G) C) and E)

Question 19

Which of the following illustrates the concept of a negative externality?

Accepted Answer

A)  Bad weather reduces the size of the wheat crop.
B)  A reduction in the size of the wheat crop causes income of wheat farmers to fall.
C)  Smoking harms the health of the smoker.
D)  Smoking harms the health of nearby nonsmokers.
E)  Public health services reduce the transmission of disease.F) A) and E)
G) B) and D)

Question 20

One way to solve negative externality problems is

Accepted Answer

A)  to organize a limited boycott of the products.
B)  subsidize the externalities.
C)  eliminate transactions costs when property rights are not legally established.
D)  issue pollution permits to polluting firms and establish a system of cap-and-trade.
E)  establish and enforce patents and copyrights.F) A) and C)
G) B) and D)

Exam 15: Externalities

Suppose that recycling rubber for running shoes creates an external benefit of $2.00 per tonne of rubber.There are no external costs.The efficient amount of rubber will be recycled when the government creates a

Correct Answer
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Consider some type of industrial pollution that generates air pollution.This industry,if left unregulated,produces

Correct Answer
verified

Use the figure below to answer the following questions. Figure 15.3.1 -Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the quantity produced is

Correct Answer
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Choose the statement that is incorrect.

Correct Answer
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Use the figure below to answer the following questions. Figure 15.2.1 -Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the price is

Correct Answer
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Correct Answer
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A market economy tends to goods with negative externalities and goods with positive externalities.

Correct Answer
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Use the figure below to answer the following questions. Figure 15.2.3 -Refer to Figure 15.2.3.A tax of per tonne is necessary to achieve the efficient output of tonnes of paper.

Correct Answer
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Use the table below to answer the following questions. Table 15.2.2 Chemical Fertilizer Market -Refer to Table 15.2.2.If the fertilizer market is perfectly competitive and unregulated,output is

Correct Answer
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Correct Answer
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Use the figure below to answer the following questions. Figure 15.3.1 -Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is

Correct Answer
verified

Use the figure below to answer the following questions. Figure 15.2.1 -Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the quantity produced is

Correct Answer
verified

Governments use subsidies

Correct Answer
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One way to solve negative externality problems is

Correct Answer
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The Coase theorem states that

Correct Answer
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Three ways governments can encourage production of goods with external benefits are

Correct Answer
verified

Which of the following illustrates the concept of a negative externality?

Correct Answer
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All of the following statements are correct except

Correct Answer
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The devices the government can use to achieve a more efficient allocation of resources in the presence of external benefits include all of the following except

Correct Answer
verified

Use the figure below to answer the following questions. Figure 15.2.2 -Refer to Figure 15.2.2.This figure shows the demand curve,the marginal private cost curve and the marginal social cost curve of good A.What is the efficient quantity of good A?

Correct Answer
verified

Exam 15: Externalities

Suppose that recycling rubber for running shoes creates an external benefit of $2.00 per tonne of rubber.There are no external costs.The efficient amount of rubber will be recycled when the government creates a

Correct AnswerverifiedShow Answer

Consider some type of industrial pollution that generates air pollution.This industry,if left unregulated,produces

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 15.3.1 -Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the quantity produced is

Correct AnswerverifiedShow Answer

Choose the statement that is incorrect.

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 15.2.1 -Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the price is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A market economy tends to ________ goods with negative externalities and ________ goods with positive externalities.

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Use the figure below to answer the following questions. Figure 15.2.3 -Refer to Figure 15.2.3.A tax of ________ per tonne is necessary to achieve the efficient output of ________ tonnes of paper.

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Use the table below to answer the following questions. Table 15.2.2 Chemical Fertilizer Market -Refer to Table 15.2.2.If the fertilizer market is perfectly competitive and unregulated,output is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 15.3.1 -Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 15.2.1 -Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then the quantity produced is

Correct AnswerverifiedShow Answer

Governments use subsidies

Correct AnswerverifiedShow Answer

One way to solve negative externality problems is

Correct AnswerverifiedShow Answer

The Coase theorem states that

Correct AnswerverifiedShow Answer

Three ways governments can encourage production of goods with external benefits are

Correct AnswerverifiedShow Answer

Which of the following illustrates the concept of a negative externality?

Correct AnswerverifiedShow Answer

All of the following statements are correct except

Correct AnswerverifiedShow Answer

The devices the government can use to achieve a more efficient allocation of resources in the presence of external benefits include all of the following except

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 15.2.2 -Refer to Figure 15.2.2.This figure shows the demand curve,the marginal private cost curve and the marginal social cost curve of good A.What is the efficient quantity of good A?

Correct AnswerverifiedShow Answer

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A market economy tends to goods with negative externalities and goods with positive externalities.

Correct Answer
verified

Use the figure below to answer the following questions. Figure 15.2.3 -Refer to Figure 15.2.3.A tax of per tonne is necessary to achieve the efficient output of tonnes of paper.

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