If a good traded in a perfectly competitive private market has positive producti

Question

If a good traded in a perfectly competitive private market has positive production externalities, then which of the following would achieve a more socially efficient outcome? Lowering output and increasing prices. Lowering output and decreasing prices. Raising output and increasing prices. Raising output and decreasing prices. None of the above; we cannot say without more information. If a tax is levied on a good but there is no change in demand, then the tax must necessarily: decrease the price consumers pay and increase the price produces receive. fall more heavily on the producer. create no deadweight loss. generate no revenue for the government. None of the above; demand does not need to change for the tax to have an effect. With a binding price ceiling, the shortage will be greater if supply is and demand is . elastic; elastic inelastic; inelastic inelastic; elastic elastic; inelastic None of the above; we cannot say without more information. Which of the following would increase demand for student concession tickets to movies? A 50% discount on the price of a student ticket. An increase in the price of popcorn in cinemas. A decrease in the price of new release DVD rentals. A cut in government spending on student services. None of the above; these would either decrease or not affect demand. Public goods are related to externalities because: both always result in underproduction by the market. the consumption of a public good has external benefits a public good affects others in a negative way they are not usually created by private producers None of the above; both are forms of market failure, but that is all they have in common.

Explanation / Answer

1. D   raising output and decreasing prices. 2. D generate no revenue for the government. 3. C inelastic ; elastic. 4. A a 50 % discount on the price of a student ticket. 5. B. the consumption of public good has external benefits.

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