This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ! Version 1 Page 3 15. Consider Carpenter Bill's supply curve (price on the vertical axis) for rocking chairs.
The market price for rocking chairs doubles from $20 to $40. This will_____
A) cause Bill's supply curve for rocking chairs to shift to the right
B) cause Bill's supply curve for rocking chairs to shift to the left.
C) not shift Bill's supply curve for rocking chairs
change in price is a move along the curve
16. Assume there cigarette smoking produces a negative external effect (second-hand
smoke). The government reacts to this situation by setting a tax on cigarette smoking
such that with the tax included the marginal cost of smoking for the smoker is greater
than the marginal cost to society from his smoking. In this case, the smoker will smoke
too little from society's perspective.
socially optimal = equilibrium, the MCs arent equal so it is not at
17. If government officials set an emissions tax too high:
A) the amount of pollution will necessarily be less efficient than if there was no
B) there will be too little pollution from a social efficiency perspective
C) there will be too much pollution from a social efficiency perspective
D) the marginal social cost of pollution will exceed the marginal social benefit of
View Full Document
This document was uploaded on 02/18/2014 for the course ECON 2010 at Colorado.
- Fall '07