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ECO 450 Week 3 Quiz

Question 1

Which of the following is a normative statement?

Question 2

If a government desires to increase production beyond the current competitively determined efficient level, the government should:

Question 3

If the efficient output of a good is produced each week, then the:

Question 4

Normative economics:

Question 5

Diamonds are sold by a monopoly firm that maximizes profits. Then it follows that:

Question 6

The marginal social cost of bread exceeds the marginal social benefit at the current weekly output. Therefore,

Question 7

An efficient level of output means:

Question 8

Positive economics is:

Question 9

Suppose the efficient output currently prevails in the market for ice cream. A tax on ice cream con­sumption will:

Question 10

The extra benefit on one more unit of a good or service is its:

Question 11

The total social benefit of automobiles equals the total social cost at current annual output. Then it follows that:

Question 12

Positive economics:

Question 13

Normative economics is:

Question 14

A move from an inefficient resource allocation to an efficient one:

Question 15

If efficiency has been attained,

Question 16

Assuming a product can be manufactured competitively without any externalities at an efficient quantity of 1,000 units and an efficient price of $100.00 per unit, what efficient quantity-price combination would be consistent with a negative externality?

Question 17

Electric power is produced by an unregulated monopoly in a certain region. The monopolistic elec­tric power company’s production of electricity results in $10 per kilowatt hour of pollution damage to parties other than the buyers of electricity in the region. To achieve efficiency,

Question 18

If the marginal costs of reducing emissions varies among regions, then regulations requiring all regions in a nation to reduce emissions by the same amount will achieve:

Question 19

The effect of a positive externality is similar to:

Question 20

The marginal external cost associated with paper production is constant at $10 per ton per year. The competitive market equilibrium for paper production is currently 10 million tons per year. A corrective tax on paper production:

Question 21

The current competitive market price of fish is $3 per pound. A chemical producer emits effluent into a lake used by a commercial fishing firm. Each ton of chemical output causes a 20-pound reduction in the annual catch of the fishing firm. Assuming that transactions costs are zero and the chemical firm has the legal right to dump effluent into the lake,

Question 22

The effect of a negative externality is similar to:

Question 23

The marginal external cost associated with air pollution increases with the annual output of a pollut­ing industry. At the current competitive equilibrium level of output per year, the marginal external cost is $10 per unit of output. To achieve efficiency,

Question 24

If a positive externality prevails in the market for smoke detectors, then when the market is in equilibrium,

Question 25

The competitive market equilibrium price of sanitation services in a small town with no government-supplied sanitation services is $2 per trash pickup. There is a $1 marginal external benefit associated with each trash pickup. The elasticity of supply of trash pickups is infinite in the long run, implying a horizontal supply curve. To achieve the efficient output of sanitation services,

Question 26

Regulations require that emissions of carbon monoxide be limited to 1,000 tons per 100 square miles for all regions of the nation. If the marginal external cost of the emissions varies among regions in the nation, then the regulations will:

Question 27

According to the Coase theorem, externalities can be internalized when transactions costs are zero through:

Question 28

Assuming a product can be manufactured competitively without any externalities at an efficient quantity of 500 units and an efficient price of $150.00 per unit, what efficient quantity-price net subsidy combination would be consistent with a corrective subsidy for a positive externality?

Question 29

A negative externality results from the sale of firewood in competitive markets. Then it follows that:

Question 30

Which of the following is true about command-and-control regulation that allows businesses to emit pollutants up to a certain point and bans emissions after that limit is reached?