Final20102010-2_withAnswers[1]

Final20102010-2_withAnswers[1] - Name: _ Date: _ Econ 2010...

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Version 2 Page 1 Name: __________________________ Date: _____________ Econ 2010 sec. 100 Final: Version 2 Fall 2010 There are 88 questions on this exam spread over 20 pages. 1. George has many tattoos on his body that the public finds offensive. George also likes walking around without much clothing on. This leads to a situation where George is displaying more tattoos than is socially efficient. Which of the following would be a Coasian solution to the problem? A) A tax on the number of tattoos that George displays. B) A law forbidding George from displaying tattoos. C) A law clarifying property rights, that says that George cannot have tattoos showing unless everyone is OK with it. In this case, society could end up with the socially optimal amount of tattoos on George because George has an incentive to bribe people so he can go naked. D) None of the above. Use the following to answer questions 2-3: Figure: Efficiency and Pollution
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Page 2 2. (Figure: Efficiency and Pollution) If the government imposed an environmental standard that did not allow the quantity of pollution to exceed 20 tons, there would be: A) a socially optimal quantity of pollution. B) too much pollution, because the marginal social cost of pollution would exceed the marginal social benefit of pollution. C) too much pollution, because any pollution is too much pollution from an economist's perspective. D) too little pollution, because the marginal social benefit of pollution would exceed the marginal social cost of pollution. 3. (Figure: Efficiency and Pollution) If the government imposed an environmental standard that did not allow the quantity of pollution to exceed 30 tons, there would be: A) too much pollution, because the marginal social cost of pollution would exceed the marginal social benefit of pollution. B) a socially optimal quantity of pollution. C) too little pollution, because the marginal social benefit of pollution would exceed the marginal social cost of pollution. D) too much pollution, because any pollution is too much pollution from an economist's perspective. 4. Joe is a cocaine addict. For him, the marginal utility of consuming the first ounce of cocaine is 15 utils and the marginal utility of consuming the second ounce of cocaine is 20 utils. This behavior is possible, and contradicts the principle of diminishing marginal utility. A) True B) False 5. Assume that there are only 2 commodities in this economy. If these two commodities are both bads, a consumer in this economy can achieve a maximum level of utility when ______. A) he or she chooses a consumption bundle that maximizes the amount of each commodity. B) he or she consumes a bundle consisting of just one of the commodities. C)
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Final20102010-2_withAnswers[1] - Name: _ Date: _ Econ 2010...

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