The main reason that public goods must be provided by the government is a. the f
ID: 1255268 • Letter: T
Question
The main reason that public goods must be provided by the government isa. the free-rider.
b. negative externalities are part of the production process.
c. they are perfectly divisible.
d. public goods are merit goods.
Public goods are desired because
a. people want and value them but the private sector will not make them available.
b. we want the government to spend our tax dollars.
c. they make supply equal to demand for private goods.
d. they came in small units.
Private goods are goods
a. for which the more one person has the less is available for someone else.
b. that are produced by the government.
c. that carry a price.
d. for which price is greater than zero.
The major economic effect of Medicare subsidies is
a. to increase the price of medical services and reduce the quantity demanded.
b. to increase the price of medical services and increase the quantity demanded.
c. that the number of physicians has decreased since compensation is low.
d. to lower the price of medical services and reduce the quantity demanded.
Granting vouchers to parents of public school students which permits sending students to private school would:
a. Shift the demand for public school education to the right and the demand for private school education to the left.
b. Leave both demand curves unchanged.
c. Shift the demand for private school education to the right and that of public school education to the left.
d. Shift both the demand for private and public school education to the right.
In the spring I enjoy the fragrance coming from my neighbors trees. This is an example of
a. a negative externality.
b. the need for antitrust legislation.
c. a demerit good.
d. a free-rider.
The government might give a subsidy when
a. a negative externality exists.
b. it wants to increase the amount of a good consumed.
c. an effluent fee has been unsuccessful.
d. it wants to transform a negative externality into a positive externality.
The political functions of government differ from the economic functions of government in that
a. the President deals with the economic functions while Congress deals with the political functions.
b. the political functions are performed at the federal government while the economic functions are at the state and local government levels.
c. the political functions relate to income distribution while the economic functions relate to the way exchange is carried out.
d. the political functions involve elections and the court systems while the economic functions involve taxation and transfers.
To correct for positive externalities the government
a. can give a subsidy.
b. can impose a tax.
c. should create a public good.
d. should allow the price system to do the correction.
In general, if a subsidy is granted to the producers of a product or service, we would expect
a. the supply curve to shift to the right and the price to stay unchanged.
b. the supply curve to shift to the right and the price to fall.
c. the supply curve to shift to the right and the price to rise.
d. the supply curve to shift to the left and the price to fall.
A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town. The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals
a. creates a negative externality.
b. is unimportant since the firm is reducing the unemployment in the region.
c. is the production of a public good.
d. creates a positive externality.
Government goods are provided to the consumer at a zero price. This means that
a. the political system is run by proportional rule.
b. the cost of the goods is the value of the resources used to produce the good.
c. people are getting something for nothing.
d. the cost to society is zero.
The provision of a legal system is an important economic function of the government because
a. people need to feel safe when they go to work.
b. the legal system affects the distribution of income through its awarding of damages in accident claims.
c. lawyers and judges tend to be high-income people.
d. the legal system affects how exchange takes place through its enforcement of contracts.
Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of
a. a breakdown in communication between the bank and its customers.
b. negative externality.
c. an interference in the workings of the price system.
d. positive externality.
The political functions of the government deal with
a. making sure supply equal demand.
b. excess demand.
c. discouraging smoking in youths.
d. promoting economic efficiency.
Explanation / Answer
The main reason that public goods must be provided by the government is
a. the free-rider.
b. negative externalities are part of the production process.
c. they are perfectly divisible.
d. public goods are merit goods.
Public goods are desired because
a. people want and value them but the private sector will not make them available.
b. we want the government to spend our tax dollars.
c. they make supply equal to demand for private goods.
d. they came in small units.
Private goods are goods
a. for which the more one person has the less is available for someone else.
b. that are produced by the government.
c. that carry a price.
d. for which price is greater than zero.
The major economic effect of Medicare subsidies is
a. to increase the price of medical services and reduce the quantity demanded.
b. to increase the price of medical services and increase the quantity demanded.
c. that the number of physicians has decreased since compensation is low.
d. to lower the price of medical services and reduce the quantity demanded.
Granting vouchers to parents of public school students which permits sending students to private school would:
a. Shift the demand for public school education to the right and the demand for private school education to the left.
b. Leave both demand curves unchanged.
c. Shift the demand for private school education to the right and that of public school education to the left.
d. Shift both the demand for private and public school education to the right.
In the spring I enjoy the fragrance coming from my neighbors trees. This is an example of
a. a negative externality.
b. the need for antitrust legislation.
c. a demerit good.
d. a free-rider.
The government might give a subsidy when
a. a negative externality exists.
b. it wants to increase the amount of a good consumed.
c. an effluent fee has been unsuccessful.
d. it wants to transform a negative externality into a positive externality.
The political functions of government differ from the economic functions of government in that
a. the President deals with the economic functions while Congress deals with the political functions.
b. the political functions are performed at the federal government while the economic functions are at the state and local government levels.
c. the political functions relate to income distribution while the economic functions relate to the way exchange is carried out.
d. the political functions involve elections and the court systems while the economic functions involve taxation and transfers.
To correct for positive externalities the government
a. can give a subsidy.
b. can impose a tax.
c. should create a public good.
d. should allow the price system to do the correction.
In general, if a subsidy is granted to the producers of a product or service, we would expect
a. the supply curve to shift to the right and the price to stay unchanged.
b. the supply curve to shift to the right and the price to fall.
c. the supply curve to shift to the right and the price to rise.
d. the supply curve to shift to the left and the price to fall.
A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town. The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals
a. creates a negative externality.
b. is unimportant since the firm is reducing the unemployment in the region.
c. is the production of a public good.
d. creates a positive externality.
Government goods are provided to the consumer at a zero price. This means that
a. the political system is run by proportional rule.
b. the cost of the goods is the value of the resources used to produce the good.
c. people are getting something for nothing.
d. the cost to society is zero.
The provision of a legal system is an important economic function of the government because
a. people need to feel safe when they go to work.
b. the legal system affects the distribution of income through its awarding of damages in accident claims.
c. lawyers and judges tend to be high-income people.
d. the legal system affects how exchange takes place through its enforcement of contracts.
Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of
a. a breakdown in communication between the bank and its customers.
b. negative externality.
c. an interference in the workings of the price system.
d. positive externality.
The political functions of the government deal with
a. making sure supply equal demand.
b. excess demand.
c. discouraging smoking in youths.
d. promoting economic efficiency.
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