Question 1

Which of the following statements is correct?

Accepted Answer

A)   Government should tax goods with either positive or negative externalities.
B)   Government should tax goods with negative externalities and subsidize goods with positive externalities.
C)   Government should subsidize goods with either positive or negative externalities.
D)   Government should tax goods with positive externalities and subsidize goods with negative externalities.E) A) and B)
F) All of the above

Question 2

When technology spillover occurs,

Accepted Answer

A)   it is the government's responsibility to own firms that are engaged in high-tech research.
B)   a firm's research yields technological knowledge that can then be used by society as a whole.
C)   those firms engaged in technology research should be taxed by the government.
D)   firms invest in the latest production technology and the cost of that technology "spills over" to the prices consumers must pay for the product.E) All of the above
F) None of the above

Question 3

A positive externality

Accepted Answer

A)   is a benefit to the producer of the good.
B)   is a benefit to the consumer of the good.
C)   is a benefit to someone other than the producer and consumer of the good.
D)   results in an optimal level of output.E) A) and B)
F) All of the above

Question 4

Does the phenomenon of externalities strengthen the argument that we should rely upon the "invisible hand" of the marketplace,or does it weaken that argument?

Accepted Answer

The phenomenon of ex...

Question 5

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Accepted Answer

A)   the market-based solution is less costly to society.
B)   the market-based solution can result in a greater reduction in pollution.
C)   the market-based solution raises revenue for the government.
D)   all of the above.E) None of the above
F) A) and B)

Question 6

Figure 10-10 
-Refer to Figure 10-10.A decrease in output from 160 units to 120 units would

Accepted Answer

A)   move the market from a socially efficient outcome to a socially inefficient outcome.
B)   reduce the external cost per unit of output.
C)   increase total economic well-being.
D)   not be an action of which a benevolent social planner would approve.E) A) and B)
F) All of the above

Question 7

Laws that are passed that either require or forbid certain behaviors are examples of command-and-control policies.

Accepted Answer

A) True 
 B)False

Question 8

Figure 10-19 
-Refer to Figure 10-19.Note that the lines labeled "Demand" and "Social Value"are parallel.Also,the slopes of the lines on the graph reflect the following facts: (1) Private value and social value decrease by $1.00 with each additional unit of the good that is consumed,and (2) private cost increases by $1.40 with each additional unit of the good that is produced.Thus,when the 59th unit of the good is produced and consumed,social well-being increases by

Accepted Answer

A)   $28.00.
B)   $31.40.
C)   $33.60.
D)   $36.00.E) B) and C)
F) A) and D)

Question 9

Government intervention that aims to promote technology-enhancing industries is called

Accepted Answer

A)   assisted technology.
B)   intervention policy.
C)   industrial technology assistance.
D)   industrial policy.E) A) and C)
F) A) and B)

Question 10

Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality?

Accepted Answer

A)   The groundwater pollution reduces the cost of large-scale pork production.
B)   The economic impact of a large-scale pork production facility is localized in a small geographic area.
C)   The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.
D)   Consumers will not reap the benefits of lower production cost from large-scale pork production.E) A) and B)
F) A) and D)

Question 11

Positive externalities

Accepted Answer

A)   result in a larger than efficient equilibrium quantity.
B)   result in smaller than efficient equilibrium quantity.
C)   result in an efficient equilibrium quantity.
D)   can be internalized with a corrective tax.E) A) and C)
F) A) and D)

Question 12

Figure 10-2.The graph depicts the market for plastic. 
-Refer to Figure 10-2.Suppose that the production of plastic creates a social cost which is depicted in the graph above.Without any government regulation,how much plastic will be produced?

Accepted Answer

A)   200
B)   500
C)   650
D)   900E) B) and C)
F) A) and B)

Question 13

Because there are positive externalities from higher education,

Accepted Answer

A)   private markets will under-supply college classes.
B)   private markets will over-supply college classes.
C)   the government should impose a tax on college students.
D)   government intervention cannot improve the market for college classes.E) A) and C)
F) A) and B)

Exam 10: Externalities

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Correct Answer
verified

Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality?

Correct Answer
verified

Laws that are passed that either require or forbid certain behaviors are examples of command-and-control policies.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Because there are positive externalities from higher education,

Correct Answer
verified

Government intervention that aims to promote technology-enhancing industries is called

Correct Answer
verified

Correct Answer
verified

A positive externality

Correct Answer
verified

Positive externalities

Correct Answer
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Does the phenomenon of externalities strengthen the argument that we should rely upon the "invisible hand" of the marketplace,or does it weaken that argument?

Correct Answer
verified
The phenomenon of ex...
View Answer

When technology spillover occurs,

Correct Answer
verified

Figure 10-10 -Refer to Figure 10-10.A decrease in output from 160 units to 120 units would

Correct Answer
verified

Figure 10-2.The graph depicts the market for plastic. -Refer to Figure 10-2.Suppose that the production of plastic creates a social cost which is depicted in the graph above.Without any government regulation,how much plastic will be produced?

Correct Answer
verified

Exam 10: Externalities

Most economists prefer corrective taxes to regulation to correct the pollution problem because:

Correct AnswerverifiedShow Answer

Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality?

Correct AnswerverifiedShow Answer

Laws that are passed that either require or forbid certain behaviors are examples of command-and-control policies.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Because there are positive externalities from higher education,

Correct AnswerverifiedShow Answer

Government intervention that aims to promote technology-enhancing industries is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A positive externality

Correct AnswerverifiedShow Answer

Positive externalities

Correct AnswerverifiedShow Answer

Does the phenomenon of externalities strengthen the argument that we should rely upon the "invisible hand" of the marketplace,or does it weaken that argument?

Correct AnswerverifiedThe phenomenon of ex...View AnswerShow Answer

When technology spillover occurs,

Correct AnswerverifiedShow Answer

Figure 10-10 -Refer to Figure 10-10.A decrease in output from 160 units to 120 units would

Correct AnswerverifiedShow Answer

Figure 10-2.The graph depicts the market for plastic. -Refer to Figure 10-2.Suppose that the production of plastic creates a social cost which is depicted in the graph above.Without any government regulation,how much plastic will be produced?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The phenomenon of ex...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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