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SCAN0818_000 - Chapter Seventeen& Eighteen Name Date...

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Unformatted text preview: Chapter Seventeen & Eighteen. Name: Date: CHAPTER 17: 1. A market economy, without any government regulation, will produce: A) B) C) too little pollution. too much pollution. 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) B) C) D) are equal to are less than exceed 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) B) C) D) is less than the socially optimal quantity. is more than the socially optimal quantity. equals the socially optimal quantity. may be more than, less than, or equal to the socially optimal quantity. 4. Suppose the production of DVDS generates sulfiir dioxide, an air pollutant. Then the market price for DVDs: A) B) C) D) is less than the marginal cost to society of DVDs. is more than the marginal cost to society of DVDs. equals the marginal cost to society of DVDs. may be more than, less than, or equal to the marginal cost to society of DVDs. 5. An extemality is said to exist when: A) B) C) D) individuals impose costs or benefits on others but have no incentive to take these costs and benefits into account. individuals impose costs or benefits on others, and the market provides incentives to take these costs and benefits into account. individual actions are affected by external forces; for example, the loss of US. jobs due to competition from abroad is an externality. 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) B) C) D) be faced with its full costs. be faced with no costs. not be faced with its full costs. be faced with excessive costs. Chapters 17 8t 18 Page 1 10. ll. 12. . If a coal—powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, this situation is an example of a(n): A) quasiupublic good. B) external cost. C) external benefit. D) specific tax. . Since the 19605, power plants have taken actions, such as switching to low-sulfur coal and installing scrubbers in their smokestacks, that have significantly reduced the problem of acid rain. Power plants took these actions mainly because: A) of concern about the environment. 13) large firms in the United States have a history of being “good citizens” and doing what is best for society, even if this reduces their profits somewhat. C) government policies provided power companies with incentives to take these actions. D) of concern about the environment and because government policies provided power companies with incentives to take these actions. . The additional cost imposed on society as a whole by an additional unit of pollution is: A) the marginal social benefit of pollution. B) the marginal social cost of pollution. C) the optimal Pigouvian tax. D) a technology spillover. There are benefits resulting indirectly from pollution, because: A) we obtain goods and services we enjoy even though, in the process, we create pollution. B) firms pollute the environment only if it allows them to provide people with goods and services they desire at a higher cost. C) businesses and consumers receive a perverse satisfaction from polluting. D) it can often be beneficial to wildlife. The socially optimal quantity of pollution occurs where: A) the marginal social benefit of pollution is equal to the marginal social cost of pollution. B) the marginal social benefit of pollution is greater than the marginal social cost of pohufion. C) the marginal social benefit of pollution is less than the marginal social cost of pollution. D) there is no pollution. The efficient quantity of pollution emissions occurs where: A) there is absolutely no damage done to a pristine environment. B) government forces zero pollution to occur, no matter What the cost. C) the marginal social benefits of pollution exceed the marginal social costs of pollution. D) the marginal social benefit of pollution is equal to the marginal social cost of pollution. Chapters 17 & 18 Page 2 13. If a good that involves external costs is priced to take these costs into account, then its price would: A) fall and output would go up. B) rise and output would fall. C) not change but output would fall. D) rise but output would sta}r the same. 14. The principal government agency in the United States responsible for enforcing national environmental policies is the: A) Department of Agriculture. B) Department of the Interior. C) Environmental Protection Agency. D) Department of Justice. CHAPTER 18: 15. Which of the following is an example of a nonexcludable good? A) health care B) national defense C) education D) ice cream 16. Which of the following goods best fit the characteristics of a private good? A) a professor giving a lecture in a large classroom B) an ice—cream cone C) fire protection D) disease prevention 17. A(n) is excludable and rival in consumption. A) private good B) artificially scarce good C) public good D) common resource 18. When Joe watched a television movie, his viewing was in consumption because other people able to View the movie at the same time Joe did. A) nonrivai; were B) rival; were C) rival; were not D) nonrival; were not 19. A good is most likely to be artificially scarce if: A) it is nonexcludable and nonrival. B) the seller is a monopolist. C) it is nonexcludable but rival. D) it is excludable but nonrival. Chapters 17 & 18 Page 3 20. 21. 22. 23. 24. 25. 26. Which of the following goods is most likely an artificially scarce good? A) tickets to a boxing match B) payaper-view of a boxing match C) health care D) the police department Which of the following goods is most likely a common resource? A) the intemet B) a public park C) a pair of pants D) the fire department Television programs are nonrival because: A) the supplier cannot prevent consumption by people who do not pay for it. B) more than one person can consume the same unit of the good at the same time. C) individuals ignore the effect their use has on the amount of the resource remaining for others. D) the market suffers from inefficiently low consumption. Clean water in a river is nonexcludable in that: A) the supplier cannot prevent consumption by people who do not pay for it. B) more than one person can consume the same unit of the good at the same time. C) individuals ignore the effect their use has on the amount of the resource remaining for others. D) the market suffers from inefficiently low consumption. If left totally to the free market, the amount of police protection provided in a city would be than it is now, and free-riders would pay for police protection. A) more; more B) more; nothing C) less; nothing D) less; a higher price An individual is more likely to free ride when a good is: A) private. B) nonexcludable. C) nonrival. D) artificially scarce. For a good to be efficiently provided by a market economy, which of the foilowing characteristics is essential? A) It is rival in consumption. B) It is excludable. C) It is a common resource. D) It is rival in consumption and it is excludable. Chapters 17 & 18 Page 4 27. A public good is a good or service for which exclusion is: A) possible and which is rival in consumption. B) possible and which is nonrival in consumption. C) not possible and which is rival in consumption. D) not possible and which is nonrival in consumption. 28. The best example of a public good is: A) legal services. B) national defense. C) a municipal library. D) cable television broadcasting. Chapters 17 SI. 18 Page 5 ...
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