Multiple Choice Question Help! QUESTION 8 Without government intervention, a pro
ID: 1156220 • Letter: M
Question
Multiple Choice Question Help!
QUESTION 8
Without government intervention, a profit-maximizing firm producing a good with an external cost will produce a quantity at which
price is greater than marginal private cost.
marginal cost is greater than marginal social cost.
price is less than marginal revenue.
price equals marginal private cost.
1 points
QUESTION 9
According to the Coase theorem, if transaction costs are low and property rights exist,
government intervention is efficient.
the efficient level of pollution will be zero.
private transactions are efficient.
a Pigovian tax will help to eliminate the deadweight loss.
1 points
QUESTION 10
According to Coase theorem, which of the following is NOT required for the private transactions to be efficient?
existence of property right.
large numbers of parties are involved.
transaction costs are low.
small numbers of parties are involved.
1 points
QUESTION 11
An externality can be defined as
an additional benefit imposed by the government on producers.
an additional cost imposed by the government based on feedback from consumers.
a cost or benefit that arises from production and falls on someone other than the producer, or a cost or benefit that arises from consumption and falls on someone other than the consumer.
the impact of one’s action on the well being of everyone.
1 points
QUESTION 12
An example of an activity that creates a positive consumption externality is
smoking, which harms the health of a bystander.
education, as it costs public money.
smoking, which harms the health of the smoker.
the H1N1 vaccination campaign.
1 points
QUESTION 13
When a highway is not congested, it is
a private good.
a public good.
a common resource.
a natural monopoly.
1 points
QUESTION 14
When a highway is congested, it has become
a private good.
a public good.
a common resource.
a natural monopoly.
1 points
QUESTION 15
The fish in the ocean are
non-rival and non-excludable.
rival and non-excludable.
rival and excludable.
a private good.
a.price is greater than marginal private cost.
b.marginal cost is greater than marginal social cost.
c.price is less than marginal revenue.
d.price equals marginal private cost.
Explanation / Answer
Ans8) d is the correct option. price equals marginal private cost.
Ans9) c is the correct option. private transactions are efficient.
Ans10) b is the correct option..large number of parties are involved
Ans11) C is the correct option. cost or benefit that arises from production and falls on someone other than the producer, or a cost or benefit that arises from consumption and falls on someone other than the consumer.
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