Question 1
Public goods are __________ .
A. rival in consumption and their benefits are excludable
B. nonrival in consumption and their benefits are excludable
C. nonrival in consumption and their benefits are nonexcludable
D. rival in consumption and their benefits are nonexcludable
Question 2
Which of the following is an example of an external cost?
A. a loud, crying baby in a public restaurant
B. emissions of methane into the atmosphere
C. a homeowner who likes to mow the lawn at 7 a.m. on Saturday morning
D. all of the above
Question 3
Based on society's perspective, what are the benefits from pollution abatement?
A. better health
B. increased enjoyment of the natural environment
C. lower production costs
D. all of the above
Question 4
Recall the application about the marginal cost and marginal benefit of reducing methane emissions. What does the optimal level of methane abatement depend on?
A. the level at which the polluting firms are able to maximize their profits
B. the total cost of abatement
C. the marginal benefit of abatement
D. It is not possible to determine an optimal level of methane.
Question 5
In the absence of government, an under-allocation of resources generally exists for __________ .
A. goods with external costs
B. imported goods and services
C. public goods
D. all of the above
Question 6
Once a firm is forced to consider an external cost, the price of its product will __________ .
A. increase and output will decrease
B. increase and output will increase
C. decrease and output will decrease
D. decrease and output will increase
Question 7
If the government taxes a firm that is generating an external cost, the price of the firm's product will __________ .
A. increase and output will decrease
B. increase and output will increase
C. decrease and output will decrease
D. decrease and output will increase
Question 8
Reductions in pollution from a specific starting level of existing pollution is called __________ .
A. abatement
B. the EPA
C. command and control
D. usage tax
Question 9
Which of the following would NOT be considered a public good?
A. national defense
B. radio broadcasts
C. police protection
D. a newspaper
Question 10
Which of the following would be typically classified as a public good?
A. postal delivery
B. national defense
C. toll roads
D. college education
Question 11
Which of the following would be an example of an external benefit?
A. More people start to ride the bus and as a result air pollution is reduced.
B. Firms are able to reduce their costs of production by using a more efficient technology.
C. The government requires polluting firms to pay a special tax.
D. A firm has just gotten permission to open a landfill on property that is adjacent to your home.
Question 12
Goods that are nonrival in consumption and that have benefits that are nonexcludable are __________ .
A. private goods
B. neighbor effects
C. public goods
D. none of the above
Question 13
When the government taxes a firm that generates an external cost, the profit maximizing firm will produce __________ .
Question 14
Private goods are __________ .
A. rival in consumption and their benefits are excludable
B. nonrival in consumption and their benefits are excludable
C. nonrival in consumption and their benefits are nonexcludable
D. rival in consumption and their benefits are nonexcludable
Question 15
The idea behind the pollution tax equal to the external cost per unit of pollution is to __________ .
Question 16
A harbor lighthouse that guides approaching ships is an example of __________ .
Question 17
If a producer is imposing an external cost on society, the best response would be to __________ .
Question 18
Which of the following would be classified as an external cost?
Question 19
Jamal and Lauren live in the countryside 30 minutes from a city in Virginia. They moved there because they wanted to enjoy the fresh air. After a year of living in their house, the 200 acres that surround their neighborhood were zoned for an industrial property. A paper mill was built on the land and now emits strong gases that can be smelled from miles away. The paper mill's emission of gases is an example of a(n. __________ .
Question 20
Chris buys pizza for his football party and he gets to decide who will have a slice of his pizza. This means his pizza is __________ .
Question 21
You own a building that has four possible uses: an Internet cafe, a coffee shop, an ice cream store, and a bookstore. The value of the building in each use is $2,000; $3,000; $4,000; and $5,000, respectively. You decide to open an ice cream store. The opportunity cost of using this building for an ice cream store is __________ .
Question 22
According to the law of diminishing marginal utility __________ .
Question 23
Consumers should allocate their scarce income so that __________ .
Question 24
The equimarginal rule __________ .
Question 25
Brandon eats four slices of pizza on a Sunday night but admits each slice of pizza doesn't taste as delicious as the previous one. This suggests that for Brandon __________ .
Question 26
You are the owner and only employee of a company that repairs computers. Last year, you earned total revenues of $75,000. Your costs for equipment, rent, and supplies were $10,000. To start this business you quit a job at another computer software firm that paid $40,000 a year. Last year, your economic profits were __________ .
Question 27
Suppose that Erin spends all of her income on two goods: pizza and fiction novels. If the price of pizza rises, then __________ .
Question 28 of 40
2.5 Points
Suppose that MUx / Px < MUy / Py . This implies that __________ .
• A. spending a dollar less on Y and spending a dollar more on X increases utility
• B. spending a dollar less on X and spending a dollar more on Y increases utility
• C. X is more expensive than Y
• D. Y is more expensive than X
Question 29
Juan is consuming three sandwiches and six sodas. If a sandwich costs twice as much as a soda, then __________ .
Question 30
Mario has a company that produces plastic freezer bags. His company objective is to maximize __________ .
Question 31
Marginal utility is the __________ .
A. total amount of satisfaction gained by the consumption of a good or service
B. additional satisfaction gained by the consumption or use of one more unit of something
C. price of a good relative to the prices of other goods and services
D. comparison of utility between two different people
Question 32
Total economic costs include __________ .
A. a normal rate of return
B. out-of-pocket costs
C. opportunity costs of all inputs
D. all of the above
Question 33
You are the owner and only employee of a company that repairs computers. Last year, you earned total revenues of $75,000. Your costs for equipment, rent, and supplies were $10,000. To start this business you quit a job at another computer software firm that paid $40,000 a year. During the year, your economic costs were __________ .
Question 34
Dan is an entrepreneur who invests in commercial and residential real estate. He has a savings account with $100,000 that earns 1% APY. Dan wants to buy a house that will give him a monthly cash inflow of $200. What will be the opportunity cost of investing in the house?
Question 35
The budget line shows __________ .
Question 36
As more of any one good is consumed in a given period, its __________ .
Question 37
The satisfaction experienced from consuming a good or service is referred to as __________ .
Question 38
Dan owns a factory that manufactures smartphones. He has many costs every month to keep his factory running. Which of the following is one of Dan's fixed costs?
Question 39
Maxine has a fixed income per month to spend on goods and services, so in allocating her limited income over a set of goods, she should purchase the goods that __________ .
Question 40
Sarah has a savings account with a $1,000 balance that earns 3% APY. She decides to withdraw the entire balance to buy a laptop computer. What will be her opportunity cost in buying the laptop?
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