exam2a - Introduction to Microeconomics Exam 2 April 2010...

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Introduction to Microeconomics Exam 2 April 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef? a. There is a natural ecological balance between the birth rate of cows and human consumption. b. Cows are privately owned, whereas many endangered species are owned by no one. c. Cows reproduce at a high rate and have adapted well to their environment. d. Public policies protect cows from predators and diseases. ____ 2. Which of the following statements is correct? a. Government should tax goods with positive externalities and subsidize goods with negative externalities. b. Government should subsidize goods with either positive or negative externalities. c. Government should tax goods with negative externalities and subsidize goods with positive externalities. d. Government should tax goods with either positive or negative externalities. ____ 3. Which of the following is not a necessary condition for the Coase theorem? a. Property rights are clearly defined. b. There are no bargaining costs. c. The government intervenes to internalize the externality. d. There are only a few parties involved. ____ 4. When the production of a good results in a positive externality, the social value curve is: a. above the supply curve, indicating the total cost to society exceeds the private cost. b. identical to the demand curve, indicating the total cost to society is the equal to the private benefit. c. above the demand curve, indicating the total value to society is greater than the private benefit. d. below the demand curve, indicating the total value to society is less than the private benefit. ____ 5. What is the difference between command-and-control policies and market-based policies toward externalities? a. Command-and-control policies rely on taxes, whereas market-based policies rely on quotas. b. Command-and-control policies are efficient, whereas market-based policies are inefficient. c. Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior. d. Command-and-control policies provide incentives for private decisionmakers to solve the problems on their own, whereas market-based policies regulate behavior directly. Figure 6-12
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D S S after tax 2 4 6 8 10 12 14 16 quantity 1 2 3 4 5 6 7 8 9 price ____ 6. Refer to Figure 6-12 . The effective price received by sellers after the tax is imposed is a. $5. b. $7. c.
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This note was uploaded on 03/23/2011 for the course 220 102 taught by Professor Perry during the Fall '09 term at Rutgers.

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exam2a - Introduction to Microeconomics Exam 2 April 2010...

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