客體優(yōu)勢(shì)效應(yīng)驗(yàn)證實(shí)驗(yàn)經(jīng)濟(jì)學(xué)原理對(duì)應(yīng)練習(xí)10經(jīng)濟(jì)學(xué)原理對(duì)應(yīng)練習(xí)10

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Chapter10ExternalitiesMultipleChoice 1. Inamarketeconomy,governmentinterventiona. willalwaysimprovemarketoutcomes.b. reducesefficiencyinthepresenceofexternalities.c. mayimprovemarketoutcomesinthepresenceofexternalities.d. isnecessarytocontrolindividualgreed.ANS:C PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 2. Intheabsenceofexternalities,the"invisiblehand"leadsamarkettomaximizea. producerprofitfromthatmarket.b. totalbenefittosocietyfromthatmarket.c. bothequityandefficiencyinthatmarket.d. outputofgoodsorservicesinthatmarket.ANS:B PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 3. Oneadvantagemarketeconomieshaveoverothertypesofeconomiesisthatmarketeconomiesa. provideanequaldistributionofgoodsandservicestoconsumers.b. establishgovernmenteconomiccontrol.c. solvetheproblemofscarcity.d. aremoreefficient.ANS:D PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 4. Thetermmarketfailurereferstoa. amarketthatfailstoallocateresourcesefficiently.b. anunsuccessfuladvertisingcampaignwhichreducesdemand.c. ruthlesscompetitionamongfirms.d. afirmthatisforcedoutofbusinessbecauseoflosses.ANS:A PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Definitional 5. Marketfailurecanbecausedbya. toomuchcompetition.b. externalities.c. lowconsumerdemand.d. scarcity.ANS:B PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Interpretive 6. Anexternalityistheimpactofa. society'sdecisionsonthewell-beingofsociety.b. aperson'sactionsonthatperson'swell-being.c. oneperson'sactionsonthewell-beingofabystander.d. society'sdecisionsonthepoorestpersoninthesociety.ANS:C PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Definitional 7. Theimpactofoneperson'sactionsonthewell-beingofabystanderiscalleda. aneconomicdilemma.b. deadweightloss.c. amulti-partyproblem.d. anexternality.ANS:D PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 8. Anexternalitya. isatypeofmarketfailure.b. causesmarketstoallocateresourcesefficiently.c. strengthenstheroleofthe“invisiblehand”inthemarketplace.d. affectsproducersbutnotconsumers.ANS:A PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Interpretive 9. Dogownersdonotbearthefullcostofthenoisetheirbarkingdogscreateandoftentaketoofewprecautionstopreventtheirdogsfrombarking.Localgovernmentsaddressthisproblembya. makingitillegalto"disturbthepeace."b. havingawell-fundedanimalcontroldepartment.c. subsidizinglocalanimalshelters.d. encouragingpeopletoadoptcats.ANS:A PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 10. Anexternalityisa. thecoststhatpartiesincurintheprocessofagreeingandfollowingthroughonabargain.b. theuncompensatedimpactofoneperson'sactionsonthewell-beingofabystander.c. thepropositionthatprivatepartiescanbargainwithoutcostovertheallocationofresources.d. amarketequilibriumtax.ANS:B PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Definitional 11. Anexternalityisanexampleofa. acorrectivetax.b. atradablepollutionpermit.c. amarketfailure.d. Bothaandbarecorrect.ANS:C PTS:1 DIF:1 REF:10-0TOP:Externalities MSC:Applicative 12. Anexternalityexistswhenevera. theeconomycanbenefitfromgovernmentintervention.b. marketsarenotabletoreachequilibrium.c. afirmsellsitsproductinaforeignmarket.d. apersonengagesinanactivitythatinfluencesthewell-beingofabystanderandyetneitherpaysnorreceivespaymentforthateffect.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Definitional 13. Whenexternalitiesarepresentinamarket,thewell-beingofmarketparticipantsa. andmarketbystandersarebothdirectlyaffected.b. andmarketbystandersarebothindirectlyaffected.c. isdirectlyaffected,andmarketbystandersareindirectlyaffected.d. isindirectlyaffected,andmarketbystandersaredirectlyaffected.ANS:C PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Analytical 14. Whichofthefollowingstatementsaboutawell-maintainedyardbestconveysthegeneralnatureoftheexternality?a. Awell-maintainedyardconveysapositiveexternalitybecauseitincreasesthehome'smarketvalue.b. Awell-maintainedyardconveysanegativeexternalitybecauseitincreasesthepropertytaxliabilityoftheowner.c. Awell-maintainedyardconveysapositiveexternalitybecauseitincreasesthevalueofadjacentpropertiesintheneighborhood.d. Awell-maintainedyardcannotprovideanytypeofexternality.ANS:C PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 15. Sincerestoredhistoricbuildingsconveyapositiveexternality,localgovernmentsmaychoosetoa. regulationthedemolitionofthem.b. providetaxbreakstoownerswhorestorethem.c. increasepropertytaxesinhistoricareas.d. Bothaandbarecorrect.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 16. Externalitiesa. causemarketstofailtoallocateresourcesefficiently.b. causeequilibriumpricestobetoohigh.c. benefitproducersattheexpenseofconsumers.d. causeequilibriumpricestobetoolow.ANS:A PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 17. Whenexternalitiesexist,buyersandsellersa. neglecttheexternaleffectsoftheiractions,butthemarketequilibriumisstillefficient.b. donotneglecttheexternaleffectsoftheiractions,andthemarketequilibriumisefficient.c. neglecttheexternaleffectsoftheiractions,andthemarketequilibriumisnotefficient.d. donotneglecttheexternaleffectsoftheiractions,andthemarketequilibriumisnotefficient.ANS:C PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 18. Dioxinemissionthatresultsfromtheproductionofpaperisagoodexampleofanegativeexternalitybecausea. self-interestedpaperfirmsaregenerallyunawareofenvironmentalregulations.b. therearefinesforproducingtoomuchdioxin.c. self-interestedpaperproducerswillnotconsiderthefullcostofthedioxinpollutiontheycreate.d. toxicemissionsarethebestexampleofanexternality.ANS:C PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 19. Ifapapermanufacturerdoesnotbeartheentirecostofthedioxinitemits,itwilla. emitalowerlevelofdioxinthanissociallyefficient.b. emitahigherlevelofdioxinthanissociallyefficient.c. emitanacceptablelevelofdioxin.d. notemitanydioxininanattempttoavoidpayingtheentirecost.ANS:B PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 20. OneoftheTenPrinciplesofEconomicsisthat"marketsareusuallyagoodwaytoorganizemarketbehavior."Thisstatementdoesnotimplywhichofthefollowing?a. Somemarketsproducenegativeexternalities.b. Theinvisiblehandofthemarketplacedoesnotalwaysleadbuyersandsellerstomaximizetotalbenefittosociety.c. Somemarketsarecharacterizedbymarketfailure.d. Othertypesofeconomiesaremoreefficientthanmarketeconomies.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Interpretive 21. Whichofthefollowingisanexampleofanexternality?a. cigarettesmokethatpermeatesanentirerestaurantb. aflushotthatpreventsastudentfromtransmittingthevirustoherroommatec. abeautifulflowergardenoutsideofthelocalpostofficed. Alloftheabovearecorrect.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 22. Whichofthefollowingstatementsisnotcorrect?a. Governmentpoliciesmayimprovethemarket'sallocationofresourceswhennegativeexternalitiesarepresent.b. Governmentpoliciesmayimprovethemarket'sallocationofresourceswhenpositiveexternalitiesarepresent.c. Apositiveexternalityisanexampleofamarketfailure.d. Withoutgovernmentintervention,themarketwilltendtoundersupplyproductsthatproducenegativeexternalities.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Interpretive 23. Whichofthefollowingrepresentsawaythatagovernmentcanhelptheprivatemarkettointernalizeanexternality?a. taxinggoodsthathavenegativeexternalitiesb. subsidizinggoodsthathavepositiveexternalitiesc. Thegovernmentcannotimproveupontheoutcomesofprivatemarkets.d. Bothaandbarecorrect.ANS:D PTS:1 DIF:2 REF:10-0TOP:Externalities MSC:Applicative 24. Whenexternalitiesarepresentinamarket,a. themarketequilibriummaximizesthetotalbenefittosocietyasawhole.b. participantslosesomemarketbenefitstobystanders.c. firmsproducetoomuchoutput.d. themarketfailstoallocateresourcesefficiently.ANS:D PTS:1 DIF:2 REF:10-0|10-1TOP:Externalities MSC:Applicative 25. Ifanexternalityispresentinamarket,economicefficiencymaybeenhancedbya. increasedcompetition.b. weakeningpropertyrights.c. betterinformedmarketparticipants.d. governmentintervention.ANS:D PTS:1 DIF:1 REF:10-1TOP:Externalities MSC:Applicative 26. Ifasawmillcreatestoomuchnoiseforlocalresidents,a. noiserestrictionswillforceresidentstomoveoutofthearea.b. asenseofsocialresponsibilitywillcauseownersofthemilltoreducenoiselevels.c. thegovernmentcanraiseeconomicwell-beingthroughnoise-controlregulations.d. thegovernmentshouldavoidinterveningbecausethemarketwillallocateresourcesefficiently.ANS:C PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 27. Privatemarketsfailtoaccountforexternalitiesbecausea. externalitiesdon'toccurinprivatemarkets.b. sellersincludecostsassociatedwithexternalitiesinthepriceoftheirproduct.c. decisionmakersinthemarketfailtoincludethecostsoftheirbehaviortothirdparties.d. thegovernmentcannoteasilyestimatetheoptimalquantityofpollution.ANS:C PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 28. Whenthegovernmentintervenesinmarketswithexternalities,itdoessoinordertoa. increaseproductionwhennegativeexternalitiesarepresent.b. protecttheinterestsofbystanders.c. makecertainallbenefitsarereceivedbymarketparticipants.d. reduceproductionwhenpositiveexternalitiesarepresent.ANS:B PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 29. Researchintonewtechnologiesa. providespositiveexternalitiesbecauseitcreatesknowledgeotherscanuse.b. resultsinnegativeexternalitiesbecausegovernmentfundingforresearchcauseslessgovernmentspendinginotherareas.c. isprotectedbypatentlaws,whicheliminatestheneedforgovernmentintervention.d. shouldonlybefundedbythecorporationsthatwillreceivetheprofitsfromtheresearch.ANS:A PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 30. Atanygivenquantity,thewillingnesstopayinthemarketforgasolineisreflectedinthea. heightofthedemandcurveatthatquantity.b. heightofthesupplycurveatthatquantity.c. valuetotheproducerofthelastunitofgasolinesold.d. totalquantityofgasolineexchangedinthemarket.ANS:A PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 31. Thesupplycurveforaproductreflectsthea. willingnesstopayofthemarginalbuyer.b. quantitybuyerswillultimatelypurchaseoftheproduct.c. costtosellersofproducingtheproduct.d. seller'sprofitfromproducingtheproduct.ANS:C PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 32. Withoutgovernmentintervention,themarketequilibriumfororangeswilla. maximizethesumofproducerandconsumersurplusinthemarket.b. bebothefficientandequitable.c. beequitablebutnotefficient.d. beneitherefficientnorequitable.ANS:A PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 33. Sinceairpollutioncreatesanegativeexternality,a. socialwelfarewillbeenhancedwhensome,butnotallairpollutioniseliminated.b. socialwelfareisoptimalwhenallairpollutioniseliminated.c. governmentsshouldencourageprivatefirmstoconsideronlyprivatecosts.d. thefreemarketresultmaximizessocialwelfare.ANS:A PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 34. Thedifferencebetweensocialcostandprivatecostisameasureofthea. lossinprofittothesellerastheresultofanegativeexternality.b. costofanexternality.c. costreductionwhenthenegativeexternalityiseliminated.d. costincurredbythegovernmentwhenitintervenesinthemarket.ANS:B PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 35. Whichofthefollowingstatementsiscorrect?a. Governmentshouldtaxgoodswitheitherpositiveornegativeexternalities.b. Governmentshouldtaxgoodswithnegativeexternalitiesandsubsidizegoodswithpositiveexternalities.c. Governmentshouldsubsidizegoodswitheitherpositiveornegativeexternalities.d. Governmentshouldtaxgoodswithpositiveexternalitiesandsubsidizegoodswithnegativeexternalities.ANS:B PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 36. Whenamarketischaracterizedbyanexternality,thegovernmenta. cancorrectthemarketfailureonlyinthecaseofpositiveexternalities.b. cancorrectthemarketfailureonlyinthecaseofnegativeexternalities.c. cancorrectthemarketfailureinthecaseofbothpositiveandnegativeexternalitiesbyinducingmarketparticipantstointernalizetheexternality.d. cannotcorrectforexternalitiesduetotheexistenceofpatents.ANS:C PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:InterpretiveFigure10-1 37. RefertoFigure10-1.Thisgraphrepresentsthetobaccoindustry.Theindustrycreatesa. positiveexternalities.b. negativeexternalities.c. noexternalities.d. noequilibriuminthemarket.ANS:B PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 38. RefertoFigure10-1.Thisgraphrepresentsthetobaccoindustry.Withoutanygovernmentintervention,theequilibriumpriceandquantityarea. $1.90and38units,respectively.b. $1.80and35units,respectively.c. $1.60and42units,respectively.d. $1.35and58units,respectively.ANS:C PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 39. RefertoFigure10-1.Thisgraphrepresentsthetobaccoindustry.Thesociallyoptimalpriceandquantityarea. $1.90and38units,respectively.b. $1.80and35units,respectively.c. $1.60and42units,respectively.d. $1.35and58units,respectively.ANS:B PTS:1 DIF:2 REF:10-1TOP:Externalities MSC:Applicative 40. RefertoFigure10-1.Thisgraphrepresentsthetobaccoindustry.Ifthegovernmentusesapollutiontax,howmuchofataxmustbeimposedoneachunitofproduction?a. $1.90b. $1.80c. $1.60d. $0.30ANS:D PTS:1 DIF:3 REF:10-3TOP:Correctivetaxes MSC:Analytical 41. RefertoFigure10-1.Thisgraphrepresentsthetobaccoindustry.Ifthegovernmentusesapollutiontax,howmuchtaxrevenuewillthegovernmentreceive?a. $7.00b. $10.50c. $63.00d. $67.20ANS:B PTS:1 DIF:3 REF:10-3TOP:Correctivetaxes MSC:AnalyticalFigure10-2 42. RefertoFigure10-2.Supposethattheproductionofsoccerballscreatesasocialcostwhichisdepictedinthegraphabove.Withoutanygovernmentregulation,howmanysoccerballswillbeproduced?a. 3b. 10c. 25d. 50ANS:D PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 43. RefertoFigure10-2.Supposethattheproductionofsoccerballscreatesasocialcostwhichisdepictedinthegraphabove.Withoutanygovernmentregulation,whatpricewillthefirmchargepersoccerball?a. $3b. $5.50c. $7.50d. $10ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 44. RefertoFigure10-2.Assumetheproductionoftheproductshownbythegraphimposesacostonsocietyof$7.00perunit.Ifthefreemarketequilibriumoutputis50units,thegovernmentshoulda. imposeataxof$2.50perunit.b. increasetheoutputofthefirmby25units.c. imposealump-sumtaxof$350perperiod.d. imposeataxof$7.00perunit.ANS:D PTS:1 DIF:2 REF:10-3TOP:Correctivetaxes MSC:Analytical 45. RefertoFigure10-2.Supposethattheproductionofsoccerballscreatesasocialcostwhichisdepictedinthegraphabove.Ifthegovernmentwantedtoforcethefirmtointernalizethecostoftheexternality,whatactionshouldittake?a. Imposeataxof$7.50persoccerball.b. Imposeataxof$7persoccerball.c. Offerasubsidyof$3persoccerball.d. Offerasubsidyof$2.50persoccerball.ANS:B PTS:1 DIF:2 REF:10-3TOP:Correctivetaxes MSC:AnalyticalThisfigurereflectsthemarketforoutdoorconcertsinapublicparksurroundedbyresidentialneighborhoods.Figure10-3 46. RefertoFigure10-3.Thesocialcostcurveisabovethesupplycurvebecausea. ittakesintoaccounttheexternalcostsimposedonsocietybytheconcert.b. ittakesintoaccounttheeffectoflocalnoiserestrictionsonconcertsinparkssurroundedbyresidentialneighborhoods.c. concertticketsarelikelytocostmorethantheconcertactuallycoststheorganizers.d. residentsinthesurroundingneighborhoodsgettolistentotheconcertforfree.ANS:A PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 47. RefertoFigure10-3.Thedifferencebetweenthesocialcostcurveandthesupplycurvereflectsthea. profitmarginofeachconcert.b. costofspillovereffectsfromtheconcert(e.g.,noiseandtraffic).c. valueofconcertstosocietyasawhole.d. amountbywhichthecityshouldsubsidizetheconcertorganizers.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 48. RefertoFigure10-3.Attheprivatemarketoutcome,theequilibriumpricewillbea. P0.b. P1.c. P2.d. Noneoftheaboveiscorrect.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 49. RefertoFigure10-3.Whatpriceandquantitycombinationbestrepresentstheoptimumpriceandnumberofconcertsthatshouldbeorganized?a. P1,Q1b. P2,Q0c. P2,Q1d. Theoptimumquantityiszeroconcertsaslongasresidentsinsurroundingneighborhoodsareadverselyaffectedbynoiseandcongestion.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 50. RefertoFigure10-3.Assumethattheconcertorganizersmustpurchaseaconcertpermitbeforeorganizingtheconcertandthatthecostforthepermitisincludedintheprivatecostcurve.Whatcriteriashouldthecityuseindeterminingwhetherornottoissueapermit?a. Themajorityvoteoftheresidentsinsurroundingneighborhoodsshoulddeterminewhetherapermitisissued.b. Aslongasthevaluetoconsumersofconcertsexceedsthecostofconcerts,includingtheexternalcosts,thepermitshouldbeissued.c. Aslongasconcertorganizersarewillingtoreturntheparktoitsoriginalconditionaftertheconcert,thepermitshouldbeissued.d. Thepermitshouldnotbeissuedaslongasthereareidentifiableexternalcostsimposedonresidentsinsurroundingneighborhoods.ANS:B PTS:1 DIF:3 REF:10-1TOP:Negativeexternalities MSC:InterpretiveFigure10-4 51. RefertoFigure10-4.IfthismarketiscurrentlyproducingatQ1,thentotaleconomicwell-beingwouldincreaseifoutputa. increasedtoQ2.b. increasedtoQ3.c. increasedtoQ4.d. stayedatQ1.ANS:A PTS:1 DIF:1 REF:10-1TOP:Negativeexternalities MSC:Analytical 52. RefertoFigure10-4.Thismarketischaracterizedbya. governmentintervention.b. apositiveexternality.c. anegativeexternality.d. Noneoftheaboveiscorrect.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 53. RefertoFigure10-4.Withoutgovernmentintervention,theequilibriumquantitywouldbea. Q1.b. Q2.c. Q3.d. Q4.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 54. RefertoFigure10-4.Thesociallyoptimalquantitywouldbea. Q1.b. Q2.c. Q3.d. Q4.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 55. RefertoFigure10-4.Thismarketa. hasnoneedforgovernmentintervention.b. wouldbenefitfromataxontheproduct.c. wouldbenefitfromasubsidyfortheproduct.d. wouldmaximizetotalwell-beingatQ3.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 56. RefertoFigure10-4.IfthismarketiscurrentlyproducingatQ4,thentotaleconomicwell-beingwouldincreaseifoutputa. increasedbeyondQ4.b. decreasedtoQ2.c. decreasedtozero.d. stayedatQ4.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 57. RefertoFigure10-4.Ifallexternalcostswereinternalized,thenthemarket’sequilibriumoutputwouldbea. Q1.b. Q2.c. Q3.d. Q4.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 58. RefertoFigure10-4.IfthismarketcurrentlyproducesQ2,totaleconomicwell-beingwouldbemaximizedifa. productiondecreasedtoQ1.b. productionincreasedtoQ3.c. thisproductwerenolongerproduced.d. outputstayedatQ2.ANS:D PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 59. RefertoFigure10-4.Externalitiesinthismarketcouldbeinternalizedifa. therewereataxontheproduct.b. therewereasubsidyfortheproduct.c. productionwerestopped.d. theCoasetheoremfailed.ANS:A PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 60. RefertoFigure10-4.AtQ3a. themarginalconsumervaluesthisproductlessthanthesocialcostofproducingit.b. everyconsumervaluesthisproductlessthanthesocialcostofproducingit.c. thecosttosocietyisequaltothevaluetosociety.d. themarginalconsumervaluesthisproductmorethantheprivatecost.ANS:A PTS:1 DIF:3 REF:10-1TOP:Negativeexternalities MSC:Analytical 61. RefertoFigure10-4.IfthismarketcurrentlyproducesQ3,totaleconomicwell-beingwouldbeincreasedifa. productiondecreasedtoQ2.b. productionincreasedtoQ4.c. thisproductwerenolongerproduced.d. outputstayedatQ3.ANS:A PTS:1 DIF:3 REF:10-1TOP:Negativeexternalities MSC:AnalyticalFigure10-5 62. RefertoFigure10-5.Whichpriceandquantitycombinationrepresentsthesocialoptimum?a. P0andQ1.b. P2andQ1.c. P1andQ0.d. P2andQ0.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 63. RefertoFigure10-5.Whichofthefollowingstatementsiscorrect?a. ThemarginalbenefitofthepositiveexternalityismeasuredbyP3-P1.b. ThemarginalcostofthenegativeexternalityismeasuredbyP3-P2.c. ThemarginalcostofthenegativeexternalityismeasuredbyP3-P1.d. ThemarginalcostofthenegativeexternalityismeasuredbyP3-P0.ANS:C PTS:1 DIF:3 REF:10-1TOP:Negativeexternalities MSC:Analytical 64. Negativeexternalitiesoccurwhenoneperson'sactionsa. causeanotherpersontolosemoneyinastockmarkettransaction.b. causehisorheremployertolosebusiness.c. revealhisorherpreferenceforforeign-producedgoods.d. adverselyaffectthewell-beingofabystanderwhoisnotpartytotheaction.ANS:D PTS:1 DIF:1 REF:10-1TOP:Negativeexternalities MSC:Definitional 65. Anegativeexternalitya. isanadverseimpactonabystander.b. causestheproductinamarkettobeunder-produced.c. isanadverseimpactonmarketparticipants.d. ispresentinmarketswherethegoodorserviceisundesirableforsociety.ANS:A PTS:1 DIF:1 REF:10-1TOP:Negativeexternalities MSC:Definitional 66. Apositiveexternalitya. causestheproducttobeoverproduced.b. providesanadditionalbenefittomarketparticipants.c. benefitsconsumersbecauseitresultsinalowerequilibriumprice.d. isabenefittoamarketbystander.ANS:D PTS:1 DIF:1 REF:10-1TOP:Positiveexternalities MSC:Definitional 67. Whichofthefollowingillustratestheconceptofanegativeexternality?a. Acollegeprofessorplaysavigorousgameofracquetballwiththeracquetherecentlypurchased.b. Afloodwipesoutafarmer'scorncrop.c. Acollegestudentplaysloudmusiconhisnewstereosystemat2:00a.m.d. Ajanitoreatsahamburgerduringhislunchbreak.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Applicative 68. Whenanegativeexternalityexistsinamarket,thecosttoproducersa. isgreaterthanthecosttosociety.b. willbethesameasthecosttosociety.c. willbelessthanthecosttosociety.d. willdifferfromthecosttosociety,regardlessofwhetheranexternalityispresent.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 69. Whennegativeexternalitiesarepresentinamarketa. privatecostswillbegreaterthansocialcosts.b. socialcostswillbegreaterthanprivatecosts.c. onlygovernmentregulationwillsolvetheproblem.d. themarketwillnotbeabletoreachanyequilibrium.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 70. Supposethatlarge-scaleporkproductionhasthepotentialtocreategroundwaterpollution.Whymightthistypeofpollutionbeconsideredanexternality?a. Thegroundwaterpollutionreducesthecostoflarge-scaleporkproduction.b. Theeconomicimpactofalarge-scaleporkproductionfacilityislocalizedinasmallgeographicarea.c. Thepollutionhasthepotentialforcreatingahealthriskforwaterusersintheregionsurroundingtheporkproductionfacility.d. Consumerswillnotreapthebenefitsoflowerproductioncostfromlarge-scaleporkproduction.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 71. Marketsareofteninefficientwhennegativeexternalitiesarepresentbecausea. privatecostsexceedsocialcostsattheprivatemarketsolution.b. externalitiescannotbecorrectedwithoutgovernmentregulation.c. socialcostsexceedprivatecostsattheprivatemarketsolution.d. productionexternalitiesleadtoconsumptionexternalities.ANS:C PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 72. Whenthesocialcostcurveisaboveaproduct'ssupplycurve,a. thegovernmenthasintervenedinthemarket.b. anegativeexternalityexistsinthemarket.c. apositiveexternalityexistsinthemarket.d. thedistributionofresourcesisunfair.ANS:B PTS:1 DIF:2 REF:10-1TOP:Negativeexternalities MSC:Analytical 73. Supposethatasteelfactoryemitsacertainamountofairpollution,whichconstitutesanegativeexternality.Ifthemarketdoesnotinternalizetheexternality,a. thesuppl