14. Damage to the environment occurs because: A) most businesses just don\'t car
ID: 1100634 • Letter: 1
Question
14. Damage to the environment occurs because:
A) most businesses just don't care about the environment.
B) consumers want goods and services at the lowest prices no matter what other costs may be involved.
C) in the process of producing the goods and services we enjoy, pollution occurs.
D) pollution reduces the social cost of production.
15. The idea that even in the presence of externalities an economy can reach an efficient solution as long as transaction costs of making a deal are low is known as:
A) a Pigouvian tax.
B) a network externality.
C) a technology spillover.
D) the Coase theorem.
16. A market economy will produce ________without any government regulation.
A) too little pollution
B) too much pollution
C) the socially optimal amount of pollution
D) the amount of pollution that maximizes total surplus
17. Pollution has ________ and ________.
A) no benefits; only costs
B) benefits; costs
C) no opposition; only advocates
D) short-term impacts; very little long-term impact
18. An externality is said to exist when:
A) individuals impose costs or benefits on others but have no incentive to take these costs and benefits into account.
B) individuals impose costs or benefits on others, and the market provides incentives to take these costs and benefits into account.
C) individual actions are affected by external forces like the loss of U.S. jobs because of competition from abroad.
D) individual actions are affected by government policies (such as taxes) that are externally imposed on the market.
19. The U.S. government health insurance program for people 65 years old and older is:
A) Medicare.
B) Medicaid.
C) the Veterans Administration.
D) health savings accounts.
20. People with more education have a lower poverty rate.
A) True
B) False
21. An example of a social insurance program is:
A) expenditure on national defense.
B) Social Security payments to the disabled.
C) the food stamp program.
D) purchasing a new city police car.
22. Which of the following transactions is a transfer payment?
A) The government pays an employee by making a direct transfer to the employee's bank account.
B) An army officer, paid by the government, transfers part of the money he receives to the government to pay his taxes.
C) A senior citizen receives a Social Security payment.
D) All of these are transfer payments.
23. The largest ________ program in the United States is ________.
A) social insurance; Medicaid
B) social insurance; Social Security payments to retired persons
C) means-tested; farmers' aid
D) means-tested; Social Security payments to retired persons
24. Moral hazard:
A) increases the ability of markets to allocate risk efficiently.
B) decreases the ability of markets to allocate risk efficiently.
C) has no impact on the ability of markets to allocate risk efficiently.
D) encourages the provision of 100% insurance coverage.
25. A ________ insurance policy is an insurance policy for which the premium is equal to the expected value of the claim.
A) fair
B) premium
C) unfair
D) diversification
26. Uncertainty about monetary outcomes is known as:
A) financial risk.
B) monetary risk.
C) profitability risk.
D) risk aversion.
27. Through insurance and other devices, the modern economy offers many ways for individuals to reduce their exposure to risk.
A) True
B) False
28. A random variable:
A) is a variable with an uncertain future value.
B) is a variable with a constant value.
C) doesn't exist in economics.
D) is useless in economic decision making.
Explanation / Answer
14) C
15) B
16) B
17) A)
18) C
19) A
20) True
21) A
22) A
23) A
24) B
25) A
26) B
27) True
28) A
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