Micro-Economics Ch 17-18 Questions

Micro-Economics Ch 17-18 Questions - Name: _ Date: _...

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Name: __________________________ Date: _____________ CHAPTER 17: 1. A market economy, without any government regulation, will produce: A) too little pollution. B) too much pollution. C) the socially optimal quantity of pollution. D) the amount of pollution that maximizes total surplus. 2. Activities that generate external costs will likely be carried out at levels that ________ those that would be efficient. A) are equal to B) are less than C) exceed D) compete with 3. Suppose the production of DVDs generates sulfur dioxide, an air pollutant. Then the equilibrium market quantity of DVDs produced and consumed: A) is less than the socially optimal quantity. B) is more than the socially optimal quantity. C) equals the socially optimal quantity. D) may be more than, less than, or equal to the socially optimal quantity. 4. Suppose the production of DVDs generates sulfur dioxide, an air pollutant. Then the market price for DVDs: A) is less than the marginal cost to society of DVDs. B) is more than the marginal cost to society of DVDs. C) equals the marginal cost to society of DVDs. D) may be more than, less than, or equal to the marginal cost to society of DVDs. 5. An externality is said to exist when: A) individuals impose costs or benefits on others but have no incentive to take these costs and benefits into account. B) individuals impose costs or benefits on others, and the market provides incentives to take these costs and benefits into account. C) individual actions are affected by external forces; for example, the loss of U.S. jobs due to competition from abroad is an externality. D) individual actions are affected by government policies (such as taxes) that are externally imposed on the market. 6. If an activity generates external costs, decision makers generating the activity will: A) be faced with its full costs. B) be faced with no costs.
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Micro-Economics Ch 17-18 Questions - Name: _ Date: _...

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