1. ECO1050 u08q1 Question 1 (Points: 2) Which of the following is true if a prod
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1. ECO1050 u08q1 Question 1 (Points: 2)Which of the following is true if a product has zero external costs? (2 points).
1. Marginal social costs are greater than marginal private costs.
2. We need more information to determine the relationship between private and social costs.
3. Marginal social costs equal marginal private costs.
4. Marginal social costs are less than marginal private costs.
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2. ECO1050 u08q1 Question 2 (Points: 2)
If a good has an external cost, what is true about the marginal private cost curve? (2 points).
1. It lies below the marginal social cost curve.
2. It lies above the marginal social cost curve.
3. It is negative.
4. It is the same as the marginal external cost curve.
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3. ECO1050 u08q1 Question 3 (Points: 3)
If the production of a good produces an external cost, then what is the efficient quantity? (3 points).
1. Less than the quantity at which the marginal benefit equals the marginal cost.
2. The quantity at which the marginal private benefit is greater than the marginal social benefit.
3. The quantity at which the marginal benefit equals marginal cost.
4. More than the quantity at which the marginal benefit equals the marginal cost.
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4. ECO1050 u08q1 Question 4 (Points: 3)
The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. It also illustrates the marginal benefit. If the city of Seattle produces 20 concerts per year, then which of the following is true? (3 points).
1. The marginal benefit will equal the marginal private cost.
2. There will be no deadweight loss.
3. The marginal benefit will be less than the marginal social cost.
4. The marginal benefit will equal the marginal external cost.
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5. ECO1050 u08q1 Question 5 (Points: 2)
This is one reason why property rights help achieve an efficient level of pollution. (2 points).
1. Property rights force the marginal external cost to a lower level than marginal private cost.
2. Property rights force the marginal private cost to equal the marginal social cost.
3. Property rights force the marginal social cost to zero.
4. Property rights eliminate marginal private costs.
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6. ECO1050 u08q1 Question 6 (Points: 2)
The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as what? (2 points).
1. The property rights theorem.
2. The pollution rights theorem.
3. The emission rights theorem.
4. The coase theorem.
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7. ECO1050 u08q1 Question 7 (Points: 2)
If a producer must pay his pollution costs because property rights have been assigned, then this will happen. (2 points).
1. Consumers will now consume more of the good because the external costs are reduced.
2. The supply curve will shift to the right as the new costs are added.
3. The pollution will be completely eliminated.
4. The supply curve will shift to the left as the new costs are added.
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8. ECO1050 u08q1 Question 8 (Points: 2)
What are the three main methods employed by governments to cope with externalities? (2 points).
1. Marketable permits, subsidies, and taxes.
2. Taxes, regulations, and subsidies.
3. Taxes, subsidies, and outright bans.
4. Emission charges, marketable permits, and taxes.
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9. ECO1050 u08q1 Question 9 (Points: 3)
Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced? (3 points).
1. More than 300 tons.
2. Two hundred tons.
3. Three hundred tons.
4. None.
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10. ECO1050 u08q1 Question 10 (Points: 3)
Both firm A and firm B emit 300 tons of pollution. Suppose both firm A and firm B have marketable permits that allow each to emit 100 tons of pollution. If it costs $5,000 for firm A to eliminate 100 tons of pollution and it costs firm B $6,000 to eliminate 100 tons of pollution, then this is true. (2 points).
1. Firm A sells its permits to Firm B for a price below $6,000.
2. Firm B sells its permits to Firm A for a price above $6,000.
3. Firm B sells its permits to Firm A for a price below $6,000.
4. Firm A sells its permits to Firm B for a price above $6,000.
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11. ECO1050 u08q1 Question 11 (Points: 2)
If the government taxes polluters, what does the government's policy do? (2 points).
1. It allows the firms to pass along higher costs but does not cut pollution.
2. It results in less production because the producers' costs have risen.
3. It allows them to pollute more by increasing the cost.
4. It eliminates pollution entirely by shifting the supply curve leftward.
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12. ECO1050 u08q1 Question 12 (Points: 2)
The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. If the government assesses the marginal external cost correctly, what is the amount of the tax? (2 points).
1. $2 per pound.
2. $3 per pound.
3. $4 per pound.
4. None of the above answers are correct.
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13. ECO1050 u08q1 Question 13 (Points: 2)
What is the result that Joan gets from eating cherries an example of? (2 points).
1. A private benefit.
2. A marginal benefit.
3. An external cost.
4. An external benefit.
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14. ECO1050 u08q1 Question 14 (Points: 2)
When the benefits of producing a good or service spill over to other people, rather than only the buyer, the spillover is referred to as this. (2 points).
1. An external benefit.
2. A marginal cost.
3. An external cost.
4. An equilibrium social output.
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15. ECO1050 u08q1 Question 15 (Points: 3)
What does it mean if a marginal external benefit is present in the production of a good or service? (3 points).
1. The marginal social benefit is greater than the marginal private benefit.
2. The marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
3. Pollution is not paid for.
4. The marginal social benefit is equal to the marginal private benefit.
Explanation / Answer
3. Marginal social costs equal marginal private costs.
1. It lies below the marginal social cost curve.
1. Less than the quantity at which the marginal benefit equals the marginal cost.
Diagram not provided
2. Property rights force the marginal private cost to equal the marginal social cost.
4. The coase theorem
4. The supply curve will shift to the left as the new costs are added.
1. Marketable permits, subsidies, and taxes
Diagram not provided
1. Firm A sells its permits to Firm B for a price below $6,000
2. It results in less production because the producers' costs have risen
Diagram not provided
Incomplete question
1. An external benefit
1. The marginal social benefit is greater than the marginal private benefit
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