17. If only private costs are considered for a good with external costs, then th
ID: 1134563 • Letter: 1
Question
17. If only private costs are considered for a good with external costs, then the private market is producing ______ for economic efficiency.
a. too few
b. too many
c. the optimal amount
20. Consider that a Burger King restaurant is a good example of monopolistic competition, and a wheat farm in Nebraska is a good example of perfect competition. What allows this conclusion to be made?
a. The restaurant industry has product differentiation; the wheat farming industry does not.
b. The restaurant is an example a homogenous product. The wheat farm is an example of production differentiation.
c. The Burger King has barriers to entry; the wheat farm does not.
d. The wheat farm has barriers to entry; the restaurant does not.
21. The monopolistically competitive firm will charge a higher price than a perfectly competitive firm. This is because of
a. the high barriers to entry in monopolistic competition.
b. the firm has some degree of market power because of product differentiation.
c. the monopolistic competitive firm always pays too much for resources (e.g. labor).
d. all of the above
22. George Orwell’s works Animal Farm and 1984 emphasized the _________ aspects of _______.
a. positive // the market economy
b. negative // the market economy
c. positive // socialism
d. negative // socialism
Explanation / Answer
17) The asnwer is C -) the optimal amount
If only private costs are considered for a good with external costs, then the private market is producing the optimal amount for economic efficiency because, firm is considering private cost with external cost so, he will produce the quantity where marginal benefit equal to marginal cost and it is known as optimal amount.
20) The asnwer is A-) The restaurant industry has product differentiation; the wheat farming industry does not.
21) The asnwer is B -) the firm has some degree of market power because of product differentiation.
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