exam5 - Suppose producer A caused producer B damage that...

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Suppose producer A caused producer B damage that could have been adjusted for by following the Coase theorem. Since producer B has the legal right to not be damaged, however, producer A compensated producer B for the full extent of the damages, which was $35,000. Which of the following is true? Question 1 answers Selected Answer: Incorrect The information and transaction costs exceeded $35,000. Correct Answer: Correct There was a redistribution of income from producer A to producer B. Question 2 text Question 2 0 out of 0 points Incorrect Which of the following does not necessarily characterize a pure public good? Question 2 answers Selected Answer: Incorrect No one can be excluded from consuming it. Correct Answer: Correct It is produced by government. Question 3 text Question 3 0 out of 0 points Correct A negative externality exists when Question 3 answers Selected Answer: Correct the marginal social costs are not taken into account in the supply curve. Correct Answer: Correct the marginal social costs are not taken into account in the supply curve. Question 4 text Question 4 0 out of 0 points Correct A free rider Question 4 answers Selected Answer: Correct consumes but does not pay for a public good. Correct Answer: Correct consumes but does not pay for a public good. Question 5 text Question 5 0 out of 0 points Incorrect Externalities exist when Question 5 answers Selected Answer: Incorrect the production process is dirty. Correct Answer: Correct the production process raises the cost curves of other firms. Question 1 0 out of 0 points Incorrect Payment of tort damages on the basis of efficiency is an attempt to Question 1 answers Selected Answer: Incorrect restore the old income distribution. Correct Answer: Correct make the wrongdoer bear the cost of reckless action and thus be more careful the next time. Question 2 text Question 2 0 out of 0 points Correct Subsidies are usually used by the government to Question 2 answers Selected Answer: Correct encourage positive externalities. Correct Answer: Correct encourage positive externalities. Question 3 text Question 3 0 out of 0 points Incorrect Regulations are usually used by the federal government to Question 3 answers Selected Answer: Incorrect discourage positive externalities. Correct Answer: Correct control negative externalities. Question 4 text Question 4 0 out of 0 points Correct The idea that government could and should intervene to correct market failures is a conclusion of Question 4 answers Selected Answer: Correct welfare economics. Correct Answer: Correct welfare economics. Question 5 text Question 5 0 out of 0 points Incorrect Suppose that a train speeding along a track caused sparks to fly into a field of cotton. The resulting fire destroyed the crop, causing $50,000 damage. Assume that the cotton farmer has the legal right to an undamaged crop. Which of the following is true? Question 5 answers
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exam5 - Suppose producer A caused producer B damage that...

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