07 Feb C13 Exam 51 Based on society’s perspective, what a
C13 Exam 51 Based on society’s perspective, what are the benefits from pollution abatement?A better healthB increased enjoyment of the natural environmentC lower production costsD all of the above2 Which of the following is an example of an external cost?A a loud, crying baby in a public restaurantB emissions of methane into the atmosphereC a homeowner who likes to mow the lawn at 7 am on Saturday morningD all of the above3 The study of external costs is a major concern of __________A labor economicsB international economicsC environmental economicsD macroeconomists4 If, while producing goods and services, a factory is producing pollution and not incurring the cost ofthis pollution, then a(n) __________ existsA government failureB market failureC acceptable outcomeD none of the above5 Reductions in pollution from a specific starting level of existing pollution is called __________A abatementB the EPAC command and controlD usage tax6 Private goods are __________A rival in consumption and their benefits are excludableB nonrival in consumption and their benefits are excludableC nonrival in consumption and their benefits are nonexcludableD rival in consumption and their benefits are nonexcludable7 Chris buys pizza for his football party and he gets to decide who will have a slice of his pizza Thismeans his pizza is __________A nonrival and nonexcludableB a private goodC a public good D rival, but nonexcludable8 Which of the following would NOT be considered a public good?A national defenseB radio broadcastsC police protectionD a newspaper9 Once a firm is forced to consider an external cost, the price of its product will __________ ?A increase and output will decreaseB increase and output will increaseC decrease and output will decreaseD decrease and output will increase10 Markets that have external costs will produce __________ output than the socially efficientlevel, whereas markets that have external benefits will produce __________ output than thesocially efficient levelA less; lessB more; moreC more; lessD less; more11 The government imposes taxes on firms that generate external costs in an effort to__________A make it easier for economists to measure external costsB lead to a zero level of outputC force decision makers to consider the full costs of their actionsD lower the firms’ costs of production12 If the government taxes a firm that is generating an external cost, the price of the firm’sproduct will __________ A increase and output will decreaseB increase and output will increaseC decrease and output will decreaseD decrease and output will increase13 By imposing tolls on people who drive during the busiest times, a government would be attempting to__________A internalize an externalityB institute a progressive taxC externalize an internality D encourage driving to generate revenue14 Sirens located around a town to warn citizens of the approach of a tornado are an example of__________A an external costB a private goodC a common resourceD a public good15 Which of the following would be classified as an external cost?A As more firms began hiring computer programmers, the salaries of computer programmers increased andtherefore the firm’s cost of production increasedB You eat too much pizza and end up with a stomach acheC You are not able to study at night because there is so much noise coming from the dorm room next to yoursD When you purchase a prescription drug you are not made fully aware of all the possible side effects thatmay result from taking the drug16 The biggest problem with using a tax as a way to solve an externality problem is that __________A the tax sometimes increases the external costB damages must be estimated in financial terms to determine the correct level of the taxC the firm will pass the entire tax onto the consumerD the commerce clause forbids such taxes17 Goods that are nonrival in consumption and that have benefits that are nonexcludable are__________ A private goodsB neighbor effectsC public goodsD none of the above18 Taxes on a firm’s external costs __________A are designed to encourage more productionB are meant to force some firms out of businessC are simply meant to force decision makers to consider the full costs of their actionsD are designed primarily as a way to raise money so that the government can compensate the victims ofthe spillover19 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 reducedB Firms are able to reduce their costs of production by using a more efficient technologyC The government requires polluting firms to pay a special taxD A firm has just gotten permission to open a landfill on property that is adjacent to yourHome20 The idea behind the pollution tax equal to the external cost per unit of pollution is to__________A increase the social benefit to be above the marginal costB internalize the externalityC allow the firm to evade external costs D drive polluting firms out of developed countries21 Dan is an entrepreneur who invests in commercial and residential real estate He has a savingsaccount with $100,000 that earns 1% APY Dan wants to buy a house that will give him amonthly cash inflow of $200 What will be the opportunity cost of investing in the house?A $1,000B $1,200C $800D $20022 From 1998 to 2010, the cost of electricity produced with nuclear power has __________ andthe cost of electricity produced with solar power has __________A increased; increasedB increased; decreasedC decreased; increasedD decreased; decreased23 A firm’s objective is to maximize its economic profit, which is __________A total revenue minus economic costB total profit minus total costC economic cost minus profitD economic cost minus total revenue24 The budget line shows __________A the different combinations of two goods that a consumer can buyB the quantity of a single good that a consumer is willing to buy at different pricesC the maximized utility from a goodD none of the above25 Suppose that Erin spends all of her income on two goods: pizza and fiction novels If theprice of pizza rises, then __________A the current marginal utility per dollar spent on pizza will riseB the current marginal utility per dollar spent on pizza will fallC the current marginal utility per dollar spent on fiction novels will riseD the current marginal utility per dollar spent on fiction novels will fall26 Mario has a company that produces plastic freezer bags His company objective is tomaximize __________A his company’s revenuesB his company’s total out-of-pocket costsC his company’s opportunity costs of each factor of productionD his company’s economic profits, the difference between total revenue and total cost27 Marginal utility is the __________ ?A total amount of satisfaction gained by the consumption of a good or serviceB additional satisfaction gained by the consumption or use of one more unit of somethingC price of a good relative to the prices of other goods and servicesD comparison of utility between two different people28 You are the owner and only employee of a company that repairs computers Lastyear, 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 computersoftware firm that paid $40,000 a year Last year, your economic profits were__________A $100,000B $75,000C $50,000D $25,00029 Suppose that a consumer is currently spending all of her income on 10 units ofgood A and 5 units of good B The price of good A is $4 per unit, the price of good Bis $10 per unit, the marginal utility of the last unit of good A consumed is 20, and themarginal utility of the last unit of good B consumed is 60 If the consumer wants tomaximize her utility from consuming the two goods, she should __________A consume more of good B and less of good AB consume more of good A and less of good BC continue to consume 10 units of good A and 5 units of good BD consume more of both goods30 If marginal product is negative, then __________A total product will decrease if more of the input is hiredB total product is equal to zeroC marginal product will increase if more of the input is hiredD average product will increase if more of the input is hired
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