StudyGuide_2

StudyGuide_2 - Study Guide Multiple Choice Identify the...

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Study Guide Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. Figure 9-12 1) Refer to Figure 9-12. Producer surplus before trade is a. $3,600. b. $4,400. c. $5,200. d. $6,600. 2) A dentist shares an office building with a radio station. The electrical current from the dentist's drill causes static in the radio broadcast, causing the radio station to lose $10,000 in profits. The radio station could put up a shield at a cost of $30,000; the dentist could buy a new drill that causes less interference for $6,000. Either would restore the radio station's lost profits. What is the economically efficient outcome? a. The radio station puts up a shield, which it pays for. b. The radio station puts up a shield, which the dentist pays for. c. Neither the radio station nor the dentist purchase additional equipment. d. The dentist gets a new drill; it does not matter who pays for it.
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3) Suppose that Maria wants to dine at a fancy restaurant, but the only available table is in the smoking section. Maria dislikes the smell of cigarette smoke. She notices that only one person, John, is smoking in the smoking section. Maria values the absence of smoke at $25. John values the ability to smoke in the restaurant at $20. In order for Maria to pay John not to smoke, she will need to tip the waiter $10 to facilitate the transaction. Which of the following represents an efficient solution? a. John continues to smoke because the cost to Maria to pay him not to smoke is between $30 and $35, which exceeds the benefit to her of no smoking ($25). b. Maria offers John between $20 and $25 not to smoke, and she pays the waiter $10. John accepts, and both parties are better off. c. Maria offers John between $20 and $25 not to smoke, and she pays the waiter $10. John declines because he has a right to smoke in the smoking section. d. Maria offers John $10 not to smoke, and she pays the waiter $10. John accepts, and both parties are better off. 4) Which of the following require firms to pay to pollute? (i) corrective taxes (ii) tradable pollution permits (iii) pollution regulations a. (i) only b. both (i) and (ii) c. (iii) only d. both (ii) and (iii) 5) Which of the following goods is excludable and not rival in consumption? a. a can of soda b. New England lobsters in the ocean c. street lights d. fire protection 6) The free-rider problem exists with a. fire protection. b.
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StudyGuide_2 - Study Guide Multiple Choice Identify the...

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