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Econ_1_Final_W04_Answers

Econ_1_Final_W04_Answers - DARTMOUTH COLLEGE ECONOMICS 1...

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D ARTMOUTH C OLLEGE P ROFESSOR J ESSE G IUMMO E CONOMICS 1: P RICE S YSTEM F INAL E XAM : W INTER 2004 P ART I: 16 M ULTIPLE -C HOICE Q UESTIONS (32 POINTS ) 1. In a market for pollution rights an increase in demand would: A) raise the price of pollution rights, but leave the quantity unchanged. B) stimulate the economic incentive to pollute. C) increase the actual amount of pollution. D) induce an increase in the supply of pollution rights. Ans: A 2. When farmer Fred weighs the benefits of cost of placing pesticides on his corn his doesn’t consider the costs that the pesticide in the runoff from his field will have on fishing in nearby streams. In the market for corn this is an example of a: 3. In the case of a negative supply side externality in the production of a good the intersection of private demand and private supply: 4. A natural monopoly exists when: 5. Which of the following is a characteristic of pure monopoly? A) close substitute products B) barriers to entry C) the absence of market power D) "price taking" Ans: B 6. A nondiscriminating pure monopolist's demand curve:
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7. In comparing the demand curve of a pure monopolist with that of a monopolistically competitive firm, we would expect the monopolistic competitor to have a:
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