A) the private demand curve will overestimate the true demand curve.
B) the private demand curve will underestimate the true demand curve.
C) consumers will be willing to pay for all these benefits in private markets.
D) the market demand curve will be the vertical summation of the individual demand costs.
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A) an increase in the value of land you own when a nearby development is completed.
B) the costs paid by a company to build an automated factory.
C) decreased property values in a neighbourhood where several houses are burglarized.
D) the higher price you pay when you buy a heavily advertised product.
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A) marginal benefit of this public good is less than the marginal cost.
B) total benefit of this public good is less than the total cost.
C) marginal benefit of this public good is greater than the marginal cost.
D) total benefit of this public good is greater than the total cost.
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A) costs have resulted in an over-allocation of resources to X.
B) benefits have resulted in an over-allocation of resources to X.
C) costs have resulted in an under-allocation of resources to X.
D) benefits have resulted in an under-allocation of resources to X.
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A) The supply curve reflects the marginal cost and the demand curve reflects the marginal benefit of this public good.
B) The demand curve reflects the marginal cost and the supply curve reflects the marginal benefit of this public good.
C) There will be an overallocation of resources at output level Q1.
D) There will be an underallocation of resources at output level Q3.
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A) clearly defined property rights.
B) many people affected and involved.
C) government intervention to establish bargaining.
D) government creation of a market for externalities.
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A) not intervene because the market outcome is optimal.
B) subsidize consumers so that the market demand curve shifts leftward.
C) subsidize producers so that the market supply curve shifts leftward (upward) .
D) tax producers so that the market supply curve shifts leftward (upward) .
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A) the situation where the maximum willingness to pay for a product is less than minimum acceptable price.
B) the situation where the maximum willingness to pay for a product is equal to the minimum acceptable price.
C) the difference between consumer and producer surplus.
D) the sum of consumer and producer surplus.
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A) 1 unit.
B) 2 units.
C) 3 units.
D) 4 units.
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A) conservation of matter and energy.
B) diminishing returns.
C) diminishing marginal utility.
D) increasing cost.
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A) increasing costs.
B) diminishing returns.
C) diminishing marginal utility.
D) conservation of matter and energy.
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A) 1 unit and the socially optimal quantity supplied will be 5 units.
B) 2 units and the socially optimal quantity supplied will be 4 units.
C) 3 units and the socially optimal quantity supplied will be 3 units.
D) 4 units and the socially optimal quantity supplied will be 2 units.
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A) has no externals associated with its production or consumption.
B) entails rising costs of production.
C) yields widespread benefits which cannot readily be denied to the public at large.
D) yields benefits only to the individual who decides to buy it.
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A) efficient resource allocation occurs at output G and price B because the market mechanism does not measure all benefits.
B) an output smaller than G would improve resource allocation.
C) government should levy a per unit excise tax on Z to shift the demand curve toward D1.
D) an output greater than G would result in a more efficient allocation of resources.
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A) total benefit equals the total cost of the public good.
B) marginal benefit equals the marginal cost of the public good.
C) average benefit equals the average cost of the public good.
D) total benefit equals the marginal cost of the public good.
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A) the paradox of externalities.
B) the median-voter theory.
C) the Coase Theorem.
D) logrolling.
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A) The total amount producer spends for making the product
B) The area under the demand curve above the equilibrium price
C) The price the producer receives.
D) The difference between producer's revenue from selling the product and the cost of producing it.
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A) costs have resulted in an over-allocation of resources to X.
B) benefits have resulted in an over-allocation of resources to X.
C) costs have resulted in an under-allocation of resources to X.
D) benefits have resulted in an under-allocation of resources to X.
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