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Chapter 10 Quiz 2

# Chapter 10 Quiz 2 - Chapter 10 Quiz Multiple Choice...

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Chapter 10 Quiz Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 10-1 __b__ 1. Refer to Figure 10-1 . This graph represents the tobacco industry. The industry creates a. positive externalities. b. negative externalities. c. no externalities. d. no equilibrium in the market. __b__ 2. Refer to Figure 10-1 . This graph represents the tobacco industry. Without any government intervention, the equilibrium price and quantity are a. \$1.90 and 38 units, respectively. b. \$1.80 and 35 units, respectively. c. \$1.60 and 42 units, respectively. d. \$1.35 and 58 units, respectively.

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Table 10-1 The following table shows the private value, private cost, and external cost for various quantities of output in a market. Quantity Private Value Private Cost External Cost 1 14 10 2 2 13 11 2 3 12 12 2 4 11 13 2 5 10 14 2 6 9 15 2 7 8 16 2 __c__ 3. Refer to Table 10-1. What is the socially-optimal quantity of output in this market? a. 1 unit b. 2 units c. 3 units d. 4 units _c___ 4. 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. There is not enough information to answer the question. __c__ 5. If a market is characterized by a positive externality that is not the result of a technology spillover, a. the socially optimal level of output is less than the equilibrium level of output, and the optimal price is greater than the equilibrium price. b. the socially optimal level of output is greater than the equilibrium level of output, and the socially optimal price is less than the equilibrium price. c. the socially optimal level of output is greater than the equilibrium level of output, and the socially optimal price is greater than the equilibrium price. d. the socially optimal level of output is less than the equilibrium level of output, and the socially optimal price is less than the equilibrium price. __d__
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Chapter 10 Quiz 2 - Chapter 10 Quiz Multiple Choice...

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