EC2106F08PS10 - Name: _ Class: _ Date: _ ID: A Practice...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Practice Problem for Ch 10 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. In a market economy, government intervention a. will always improve market outcomes. b. reduces efficiency in the presence of externalities. c. may improve market outcomes in the presence of externalities. d. is necessary to control individual greed. Figure 10-4 ____ 2. Refer to Figure 10-4. At Q 3 a. the marginal consumer values this product less than the social cost of producing it. b. every consumer values this product less than the social cost of producing it. c. the cost to society is equal to the value to society. d. the marginal consumer values this product more than the private cost. ____ 3. Suppose that meat producers create a negative externality. What is the relationship between the equilibrium quantity and the socially optimal quantity of meat to be produced? a. They are equal. b. The equilibrium quantity is greater than the socially optimal quantity. c. The equilibrium quantity is less than the socially optimal quantity. d.
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EC2106F08PS10 - Name: _ Class: _ Date: _ ID: A Practice...

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