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AssignmentVIII - ARE 201 Introduction to Agricultural...

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ARE 201: Introduction to Agricultural & Resource Economics, Spring 2008 Assignment VIII (Chapter 9) 1) A private cost is a cost of production that is borne by the A) government. B) everyone: consumers, producers, and those who do not consume or produce the good. C) consumer. D) producer. E) consumer and the government. Topic: Private cost 2) For a firm, its labor costs are A) a private cost. B) Both answers A and B are correct. C) an external cost. D) Both answers A and C are correct. E) a marginal benefit. Topic: Private cost 3) The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal Topic: External cost 4) A firm dumps dioxin in a river, thereby severely polluting the river. The cost of the water pollution is i. zero for the firm. ii. an external cost. iii. part of the marginal social cost Topic: External cost 5) If the marginal external cost of building a children's playground equals zero, then the marginal i. private cost equals the marginal social cost. ii. social cost equals zero. iii. private cost equals zero. Topic: External cost 1
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6) Suppose two neighborhoods with 10 homes each in Buffalo, New York are identical except one of them is near a toxic waste dump. If homes near the dump sell for an average of $40,000 and the other homes sell for $90,000, the external cost of the dump is A) $900,000. B) $400,000. C) $90,000. D) $1,300,000. E) $500,000. Topic: External cost 7) If the production of a good causes an external cost, then the efficient quantity is Topic: Efficiency 8) The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Seattle is Topic: Efficiency
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