15. In the case of a beneficial externality a. marginal private cost is below ma
ID: 1213830 • Letter: 1
Question
15. In the case of a beneficial externality
a.
marginal private cost is below marginal social cost.
b.
marginal social cost is above marginal private cost.
c.
marginal social cost and marginal private cost are equal.
d.
the free market price is below the socially efficient price.
____ 16. A true public good is characterized by
a.
depletability but not excludability.
b.
excludability but not depletability.
c.
both depletability and excludability.
d.
neither depletability nor excludability.
____ 17. The "free rider" problem occurs when a good is
a.
not available.
b.
not excludable.
c.
not depletable.
d.
not sold in free markets.
____ 18. National defense and coastal lighthouses are examples of
a.
public goods.
b.
private goods.
c.
high marginal cost goods.
d.
depletable goods.
____ 19. Which of the following is not a public good?
a.
a coastal lighthouse
b.
national defense
c.
a city park playground
d.
the latest Walt Disney movie
____ 20. The cost disease of the service sector is evidenced by
a.
a failure of the market mechanism.
b.
increased quality of public and private services.
c.
dramatic increases in municipal budget burdens for education, health care, and police and fire protection.
d.
the increased productivity in the services area.
__E__ 21. Which of the following contribute to productivity growth?
a.
the education and experience of the labor force.
b.
investment in plants and equipment.
c.
innovation resulting in new products.
d.
innovation resulting in new processes.
e.
All of the above are correct.
____ 22. Capitalism is a market economic system with
a.
most production processes controlled by the government.
b.
most production processes controlled by private firms with minimal government control.
c.
all production processes controlled by private firms.
d.
all production processes controlled by the government.
____ 23. Firms share technology with rivals,
a.
in order to better compete with their rivals.
b.
in order to help out when their rivals are in trouble.
c.
to share the substantial risks of innovation.
d.
because they are required to by law.
e.
in order to pass false information to their rivals in order to drive them out of business.
____ 24. A profit-maximizing monopoly will spend on a process innovation
a.
up to the point where P = MC.
b.
up to the point where P = AC.
c.
anywhere where MR>MC.
d.
up to the point where MR = MC.
e.
anywhere where MR<MC.
____ 25. A successful process innovation can be expected to lead to
a.
an upward shift of the MC and AC curves which will lower output and raise the price of the product.
b.
an upward shift of the MC and AC curves which will raise output and lower the price of the product.
c.
a downward shift of the MC and AC curves which will lower output and raise the price of the product.
d.
a downward shift of the MC and AC curves which will raise output and lower the price of the product.
e.
a downward shift of the MC and AC curves which will leave unchanged the output and price of the product.
____ 26. A firm producing a smoke externality is producing
a.
more than the socially optimal quantity of output.
b.
less than the socially optimal quantity of output.
c.
exactly the socially optimal quantity of output.
d.
There is insufficient information to answer.
____ 27. Rising prices help control the process of resource depletion by
a.
discouraging consumption and waste.
b.
stimulating more efficient use of the depletable resource.
c.
encouraging resource-saving innovation.
d.
doing all of the above.
____ 28. Rising prices for a natural resource stimulate
a.
the development of complements for the resource.
b.
the development of substitutes for the resource.
c.
the development of externalities from the resource.
d.
All of the above are correct.
____ 29. Taxes on sales of liquor, tobacco, gasoline and non-essentials are examples of
a.
direct taxes.
b.
excise taxes.
c.
progressive taxation.
d.
loopholes.
____ 30. The incidence of a tax refers to
a.
who actually collects the tax.
b.
how frequently the tax is collected.
c.
who bears the economic burden of the tax.
d.
how the tax affects prices or wages.
a.
marginal private cost is below marginal social cost.
b.
marginal social cost is above marginal private cost.
c.
marginal social cost and marginal private cost are equal.
d.
the free market price is below the socially efficient price.
Explanation / Answer
Ans-15. In the case of a beneficial externality-
Marginal propensity cost is greater than marginal social cost.
16.A true public good is characterized by-
d.neither depletability nor excludability.
17. The "free rider" problem occurs when a good is-
b.not excludable.
18. National defense and coastal lighthouses are examples of-
a. public goods.
19. Which of the following is not a public good-
d.The latest Walt Disney Movie.
20.The cost disease of the service sector is evidenced by-
c.dramatic increases in municipal budget burdens for education, health care, and police and fire protection.
21.Which of the following contribute to productivity growth-
e. All of the above are correct.
22.Capitalism is a market economic system with-
b.most production processes controlled by private firms with minimal government control.
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