1)A market in which there are neither external benefits nor external costs is: S
ID: 1215611 • Letter: 1
Question
1)A market in which there are neither external benefits nor external costs is:
Select one: a. efficient. b. inefficient. Incorrect c. efficient and equitable. d. impossible.
2)Recall the Application. LoJack is system that allows the police to track stolen cars. This provides an external benefit by:
Select one: a. getting the owner back his car. b. reducing car theft. c. giving profits to the producers of LoJack. d. All of these Incorrect
3)Scientific research is subsidized by the government because
Select one:
a. it yields benefits to consumers and producers who did not participate in the research. b. researchers are under-paid by private firms, so the government must make up the difference. c. much scientific research takes place at state-funded universities. d. scientific research has no market value so would not be undertaken without government intervention. Incorrect
4)Suppose Anna has a bungalow house in a good neighborhood in South Tampa, FL. She decides to have the exterior of her house painted and the windows replaced. After the work is completed her house has appreciated in value and has also helped the neighbors' houses to go up in value. This is an example of a:
Select one:
a. public good with external benefits. Incorrect b. private good with external benefits. c. public good without external benefits. d. private good without external benefits.
5)The forces of supply and demand will provide a quantity that is:
Select one:
a. less than the efficient quantity if a good generates external benefits. b. more than the efficient quantity if a good generates external benefits. c. exactly the efficient quantity if a good generates external benefits. d. either more than or less than the efficient quantity if a good generates external benefits. It is impossible to know whether it will be too much or too little without more information. Incorrect
6)The marginal principle ________ to private goods with external benefits because ________.
Select one:
a. does apply; the efficient quantity is that quantity for which the marginal social benefit equals the marginal cost b. does apply; the efficient quantity is that quantity for which the marginal private benefit equals the marginal cost Incorrect c. does not apply; the efficient quantity is a quantity greater than the quantity for which the marginal private benefit equals the marginal cost d. does not apply; it is a principle that governs private markets with no externalities
Explanation / Answer
Answer 1:
Option a. The market is efficient when there are no externalities present. But it is not true that it will be equitable.
Answer 2:
Option B.
Answer 3:
Option B.
Answer 4:
Option B.
Answer 5:
Option a. The quantity will be less in case of the good generating external benefit as scoial benefit will not be taken into consideration.
Answer 6:
Option C.
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