Multiple choice question help! Common resources tend to get overused because soc
ID: 1156219 • Letter: M
Question
Multiple choice question help!
Common resources tend to get overused because
social costs are not monitored.
the marginal private costs exceed the marginal private benefits.
the marginal private benefit will always exceed the marginal social cost.
the marginal social benefit is not taken into consideration by producers.
1 points
QUESTION 2
A government provides public goods because
free-rider problems result in underproduction by private markets.
governments are more efficient than private firms at producing public goods.
private firms will make an economic profit.
government wants to be popular.
1 points
QUESTION 3
The “tragedy of the commons” refers to the absence of incentives to
conserve marginal cost of common resources.
reduce overuse of common resources.
discover new common resources.
reduce underuse of common resources
1 points
QUESTION 4
Refer to the figure below. To promote an efficient quantity, the government could grant a subsidy equal to
$20.
$30.
$40.
$50.
1 points
QUESTION 5
Refer to the figure below. If a subsidy is granted that generates an efficient quantity, then the quantity produced is
zero.
300.
500.
600.
1 points
QUESTION 6
Refer to the table below. If a constant per unit tax is imposed, thereby generating an efficient allocation of resources the quantity produced is
Output (units)
Private Benefit ($)
Marginal Cost ($)
Marginal Social Cost ($)
20
8
0.5
4
40
6
2
6
60
4
4
8
80
2
6
10
zero.
20
40
60
1 points
QUESTION 7
Refer to the table below. The Pigovian tax that achieves the efficient quantity of output is
Output (units)
Marginal Social Benefit ($)
Marginal Private Cost ($)
Marginal Social Cost ($)
3
190
100
150
4
180
130
180
5
170
140
190
6
160
160
210
$50 per unit.
$40 per unit.
$30 per unit.
$20 per unit.
a.social costs are not monitored.
b.the marginal private costs exceed the marginal private benefits.
c.the marginal private benefit will always exceed the marginal social cost.
d.the marginal social benefit is not taken into consideration by producers.
Explanation / Answer
1. (c) Common resources tend to be overused because the marginal private benefit will always exceed the marginal social cost.
2. (a) A government provides public goods because free-rider problems result in underproduction by private markets.
3. (b) The tragedy of the commons refers to the absence of incentives to reduce overuse of common resources.
4) and 5) No diagram visible. Please paste diagram again in comment section so that I can answer.
6. (c) An efficient allocation of resources is attained at a point where MPB = MSC. Thus, Q = 40 units.
7. (a) Efficient quantity = 4 units.
Thus, pigouvian tax is given by: MSC - MPC = 50$ per unit.
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