Quiz
Micro pt 2
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Questions in this quiz (100)
1The price elasticity of supply measures
- Ahow much the quantity supplied responds to changes in input prices.
- Bhow much the quantity supplied responds to changes in the price of the good.
- Chow much the price of the good responds to changes in supply.
- Dhow much sellers respond to changes in technology.
2If sellers respond substantially to changes in the price, then
- Asellers are considered to be relatively price sensitive and supply would be price elastic.
- Bsellers are considered to be relatively price insensitive and supply would be price inelastic.
- Cthe supply curve will shift substantially when the price rises.
- Dsupply will decrease when the price falls.
3If the quantity supplied responds only slightly to large changes in price, then
- Asupply is said to be elastic.
- Bincreases in supply resulting from an increase in price will not shift the supply curve very much.
- Csupply is said to be inelastic.
- Dsellers don't respond at all to changes in price.
4The main determinant of the price elasticity of supply is
- Atime.
- Bthe number of sellers.
- Cthe number of buyers.
- Dthe level of technology.
5Suppose than an increase in the price of carrots from $1.20 to $1.40 per pound raises the amount of carrots that carrot farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, which of the following is the price elasticity of supply?
- A0.54
- B0.50
- C2.00
- D1.86
6In the long run, the quantity supplied
- Acan respond substantially to a change in price.
- Bcannot respond much to a change in price.
- Ccannot respond at all to a change in price.
- Dwill naturally increase regardless of what happens to price.
7When a supply curve is relatively flat, then
- Aa. the supply is relatively elastic.
- Bb. the supply is relatively inelastic.
- Cc. sellers are not at all responsive to change in price.
- Dd. quantity supplied changes substantially when the price changes.
- EBoth (a) and (d) are correct.
8A perfectly vertical supply curve signifies that
- Aa change in price will have no effect on quantity supplied.
- Ba change in price will change quantity supplied in the opposite direction.
- Can infinite quantity will be supplied at a given price.
- Dthe relationship between price and quantity supplied is inverse.
9In the figure shown, the binding price ceiling is shown in
- Apanel (a).
- Bpanel (b).
- Cboth panel (a) and panel (b).
- Dneither panel (a) nor panel (b).
10In panel (a), the price ceiling
- Ais not binding.
- Bis binding.
- Cwill cause a shortage of CDs.
- Dwill cause a surplus of CDs.
- ETwo of the above are correct.
11In panel (b), the price ceiling
- Aa. is binding.
- Bb. is not binding.
- Cc. will cause a shortage of CDs.
- Dd. will cause a surplus of CDs.
- Ea and c are correct.
12Suppose that there is a binding price ceiling imposed on the market for peaches. At the ceiling price,
- Athe quantity of peaches demanded will be greater than the quantity supplied.
- Bthe quantity of peaches demanded will be equal to the quantity supplied.
- Cthe quantity of peaches demanded will be smaller than the quantity supplied.
- Dthe quantity of peaches demanded will be artificially restricted by the price ceiling.
13Rationing mechanisms that develop under price ceilings
- Aare inefficient.
- Bare potentially discriminatory and unfair.
- Coften waste buyers' time.
- Dall of the above
- Enone of the above
14Free markets ration goods with
- Aprices.
- Blong lines.
- Cration coupons.
- Ddiscrimination.
15Long lines at gas stations in the U.S. in the 1970s were primarily a result of
- Aa. the fact that OPEC raised the price of crude oil in world markets.
- Bb. the fact that U.S. gasoline producers raised the price of gasoline.
- Cc. the fact that the U.S. government had imposed a price ceiling on gasoline.
- Da and b
16In the figure shown, which panel(s) best represent(s) a binding rent control in the short run ?
- Apanel (a)
- Bpanel (b)
- Cpanel (c)
- Dnone of the panels
- Eall of the panels
17In the figure shown, which panel(s) best represent(s) a binding rent control in the long run ?
- Apanel (a)
- Bpanel (b)
- Cpanel (c)
- Dnone of the panels
- Eall of the panels
18In panel (c), at the actual rental price there will be
- Aequilibrium.
- Ba shortage of rental housing.
- Ca surplus of rental housing.
- Dnon-price rationing of rental housing.
- Eb and d are correct
19In free markets, landlords try to keep their buildings clean and safe because
- Athey love their tenants and have a great concern for social well-being.
- Bappealing and desirable apartments command higher prices and may earn landlords higher profits.
- Cthey are forced to do so by law.
- Dthere is always a surplus of housing.
20Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
- Awith housing shortages and long waiting lists for tenants, they have no incentive to maintain and
improve their rental property. - Bthey know they can never please their tenants no matter how hard they try.
- Cthe government no longer requires them to maintain their buildings.
- Dthey see it as a way of protesting against the controls.
- Awith housing shortages and long waiting lists for tenants, they have no incentive to maintain and
21A binding price floor causes
- Aa. an excess demand.
- Bb. a shortage.
- Cc. an excess supply.
- Da and b
22In a market with a binding price floor, rationing among suppliers is accomplished through
- Aa. the price mechanism.
- Bb. the automatic adjustments in the market which reflect the supplies of sellers and the demands of
buyers. - Cc. non-price mechanisms.
- Da and b
23The minimum wage is an example of
- Aa price ceiling.
- Ba price floor.
- Ca free-market process.
- Dan efficient labor allocation mechanism.
24If the minimum wage is set above the equilibrium wage,
- Athe quantity of labor demanded will be greater than the quantity supplied.
- Bthe quantity of labor demanded will equal the quantity supplied.
- Cthe quantity of labor demanded will be less than the quantity supplied.
- Dthere will be unemployment for some low-skilled workers.
- EBoth c and d
25Workers with high skills and much experience are not affected by the minimum wage because
- Athey belong to unions.
- Bthey are not legally guaranteed the minimum wage.
- Cthey generally earn wages less than the minimum wage.
- Dtheir equilibrium wages are well above the minimum wage.
26The equilibrium wages of teenagers tend to be
- Alow because teenagers are among the least skilled and least experienced workers.
- Bhigh because teenagers are among the strongest and most energetic workers.
- Clow because most teenagers work part time.
- Dhigh because teenagers tend to join unions.
27In general, opponents of the minimum wage
- Acontend that it is a poor way to combat poverty.
- Bpoint out that a high minimum wage causes unemployment among the least skilled workers.
- Ccontend that the minimum wage prevents some workers from getting on-the-job training that they
need. - Dbelieve that the minimum wage is a poorly-targeted policy if the intent is to help people in poverty.
- Eall of the above
28In a market system, prices
- Ahave the crucial job of balancing supply and demand.
- Bsend signals to buyers and sellers to help them make rational economic decisions.
- Ccoordinate scarce resources and economic activity.
- Dall of the above
- Enone of the above
29When policymakers set prices by legal decree,
- Athey obscure the signals that normally guide the allocation of scarce resources to their highest and
best uses. - Bthey improve the efficiency of resource allocation in society by making it more fair.
- Cgovernment planning boards are able to use all of the information the market uses in determining
prices through supply and demand. - Dall of the above
- Enone of the above
- Athey obscure the signals that normally guide the allocation of scarce resources to their highest and
30The term tax incidence refers to
- Aa. the Boston Tea Party.
- Bb. the "tax revolt" movement.
- Cc. the division of the tax burden between buyers and sellers.
- Dd. the division of the tax burden between sales taxes and income taxes.
- Ec and d
31A tax on the buyers of popcorn will
- Aa. cause buyers of popcorn to demand a smaller quantity of popcorn at every price.
- Bb. cause the demand for popcorn to shift to the left.
- Cc. cause the demand for popcorn to shift to the right.
- Da and c.
- Ea and b.
32What is true about the burden of a tax imposed on sellers of popcorn?
- ABuyers bear the entire burden of the tax.
- BSellers bear the entire burden of the tax.
- CBuyers and sellers share the burden of the tax.
- DThe government bears the entire burden of the tax.
33If a tax is imposed on a market with inelastic demand and elastic supply,
- Abuyers will bear most of the burden of the tax.
- Bsellers will bear most of the burden of the tax.
- Cthe burden of the tax will be shared equally between buyers and sellers.
- Dit is impossible to determine how the burden of the tax will be shared.
34If a tax is imposed on a market with elastic demand and inelastic supply,
- Abuyers will bear most of the burden of the tax.
- Bsellers will bear most of the burden of the tax.
- Cthe burden of the tax will be shared equally between buyers and sellers.
- Dit is impossible to determine how the burden of the tax will be shared.
35Which of the following is the most correct statement about tax burdens?
- AA tax burden falls most heavily on the side of the market that is elastic.
- BA tax burden falls most heavily on the side of the market that closer to unit elastic.
- CA tax burden falls most heavily on the side of the market that is inelastic.
- DA tax burden is distributed independently of relative elasticities of supply and demand.
36Caitlin would be willing to pay $50 to see Le Miserables, but buys a ticket for only $30. Caitlin values the performance at __________ and her consumer surplus is __________.
- A$30, $50
- B$50, $20
- C$50, $30
- D$30, $20
37Kerstin buys a new pure-bred dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is
- A$100.
- B$150.
- C$250.
- Dunknown from just this information.
38Josh is lost in the Nevada desert. He determines that he would be willing to pay $50 for a quart of cold Gatorade. He happens upon a lone grocery store / gas station, buys a quart of cold Gatorade, and realizes a consumer surplus of $45.00. What did he pay for the Gatorade?
- A$50
- B$45.00
- C$95.00
- D$5.00
- Eit is impossible to determine from the information given
39Consumer surplus is
- Athe quantity of a good consumers get but did not have to pay for.
- Bthe amount a consumer has to pay less the amount the consumer was willing to pay.
- Cthe amount a consumer was willing to pay less the amount the consumer actually paid.
- Dthe total value of a good to a consumer.
40Refer to the graph shown. What area represents consumer surplus when the price is P *?
- AA
- BB
- CC
- DA + B
- EA + B + C
41Suppose that the demand for French bread increases. What will happen to producer surplus in the market for French bread?
- AIt increases.
- BIt decreases.
- CIt is unaffected by this change in market forces.
- DIt decreases briefly, then increases.
42Producer surplus is
- Aa. the area under the supply curve to the left of the amount sold.
- Bb. the amount a seller is paid less the marginal cost of production.
- Cc. the amount represented by the area above the supply curve and below the equilibrium price.
- Dd. the cost to sellers of participating in a market.
- Eboth b and c
43Roland produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is
- A$200 per ton.
- B$300 per ton.
- C$500 per ton.
- D$700 per ton.
44Billy and Andy sell lemonade on the corner for $0.10 per glass. Their producer surplus is $0.06 per glass. Their willingness to supply is
- A$0.16.
- B$0.10.
- C$0.06.
- D$0.04.
- Eimpossible to determine.
45In economics, discussions about efficiency are discussions that are
- Apositive, descriptive of scarce resource allocation and use.
- Bnormative, prescriptive of scarce resource redistribution.
- Cneither positive nor normative.
- Dpolitical.
46Economists tend to see ticket scalping as
- Aa way for a few to profit while producing nothing of value.
- Ban inequitable interference in the orderly process of ticket distribution.
- Ca way of increasing the allocative efficiency of ticket distribution.
- Dan unproductive activity which should be made illegal everywhere.
47When a tax is levied on a good
- Abuyers are economically worse off but sellers are economically better off.
- Bsellers are worse off but buyers are economically better off.
- Cboth buyers and sellers are economically better off.
- Dboth buyers and sellers are economically worse off.
48A tax levied on the supplier of a product shifts the supply curve _________. A tax levied on the buyers of a product shifts the demand curve ___________.
- Aupward or to the left; downward or to the left
- Bupward or to the left; upward or to the right
- Cdownward or to the right; downward or to the left
- Ddownward or to the right; upward or to the right
49With the market in equilibrium, consumer surplus is represented by the area
- AO-B-E-F.
- BO-C-E-F.
- CA-B-E.
- DO-E-H.
- EB-C-E.
50When the market is in equilibrium, producer surplus is represented by the area
- AO-B-E-F.
- BA-B-E.
- CO-B-E-F..
- Dneither a, b, nor c
51The benefit received by buyers in a market is measured by
- Aconsumer surplus.
- Bthe amount buyers actually pay for the good.
- Cthe amount it costs producers to produce the good.
- Dbothbandcbutnota
52The benefit received by the sellers of a good in a market is measured by
- Aconsumer surplus.
- Bproducer surplus.
- Cthe amount buyers pay for the good in excess of the amount the good is actually worth.
- Dboth a and c but not b
53After the tax is levied, consumer surplus is represented by the area
- APM-A-C.
- BPM -PB -B-C.
- CPB-A-B.
- DB-D-C.
54After the tax is levied, producer surplus is represented by the area
- AO-F-C-QM.
- BO-F-E-QA.
- CF-PM-C.
- DF-PS-E.
55The tax caused a reduction in consumer surplus represented by the area
- AD-B-C.
- BE-D-C.
- CPM -PB -B-C.
- DPM -PB -C-D.
56The tax caused a reduction in producer surplus represented by the area
- AO-F-C-QM.
- BF-PS-E.
- CE-D-C.
- DPS -PM -C-E.
57The loss in total welfare resulting from the levying of the tax is represented by the area
- APS -PB -B-C-E.
- BPS -PM -D-C-E.
- CPS -PM -C-E.
- DE-B-C.
58The loss in total surplus (economic welfare) resulting from a tax is called
- Athe Federal deficit.
- Bthe Federal surplus.
- Cthe deadweight loss.
- Done of the "Ten Principles of Economics."
59Taxes cause scarce resources to be allocated differently than those resources would be allocated by free markets. Taxes provide incentives for consumers to consume ________ , and incentives for producers to produce ________ than in free markets.
- Aless; more
- Bmore; more
- Cmore; less
- Dless; less
60Taxes cause deadweight losses if
- Athey transfer purchasing power to the government which always wastes money.
- Bthey prevent buyers and sellers from realizing some of the gains from trade.
- Cmarginal buyers and sellers leave the market causing the quantity bought and sold to fall.
- Dboth b and c are correct
- Enone of the above
61Assume that the demand for salt is relatively inelastic and that the demand for orange juice is relatively elastic. Th elasticity of supply is exactly the same for both goods. Imposing a tax on salt will cause ________ total deadweight loss than imposing the same percentage tax on orange juice.
- Aa greater
- Ba lesser
- Cneither a greater nor a lower
- Deither a greater or a lesser
- Eunable to determine without more information
62Countries most often impose restrictions on free foreign trade to
- Aprotect foreign producers.
- Bprotect foreign consumers.
- Cprotect domestic producers.
- Dprotect domestic consumers.
63Country A will be
- Aan exporter of wheat.
- Ban importer of wheat.
- Cneither an importer nor an exporter.
- Dneither a, b, nor c is correct
64Consumer surplus in Country A will be equal to the area measured by
- A2-6-17.
- B3-6-13.
- C2-6-13-14.
- Dneither a, b, nor c
65Producer surplus in Country A will be equal to the area measured by
- A1-3-13.
- B1-3-13-14-10.
- C1-2-10.
- D0-1-13-15.
66Compared with no trade, free trade results in _________ in consumer surplus equal to the area _________.
- Aan increase; 10 - 13 - 17
- Ban increase;2-3-13-17
- Ca decrease;9-13-20
- Da decrease;10-13-17
67In the figure shown, as a result of the tariff, consumer surplus __________ by __________, producer surplus __________ by __________, government tariff revenue is __________, and deadweight loss is __________.
- Aincreases, F + G + H, decreases, C, G, E
- Bdecreases,C+F+G+H,increases,C,G,F+H
- Cdecreases,C+F+G+H,increases,C,F+G+H,zero
- Dincreases,C+F+G+H,decreases,C,F+G,H
68An externality exists when
- Athe government intercedes in the operation of private markets.
- Bmarkets are not able to reach equilibrium.
- Ca firms sells its product in a foreign market.
- Done person’s or group’s actions affect the well-being of another person or group.
69When externalities exist, buyers and sellers
- Ahave an incentive to neglect the external effects of their actions, and the market equilibrium is
efficient. - Bdo not neglect the external effects of their actions and the market equilibrium is efficient.
- Chave an incentive to neglect the external effects of their actions, and the market equilibrium is
inefficient. - Ddo not neglect the external effects of their actions and the market equilibrium is inefficient.
- Ahave an incentive to neglect the external effects of their actions, and the market equilibrium is
70Hikers frequently claim that livestock grazing in Wilderness Recreation Areas reduces the satisfaction of their recreational hiking experience. An explanation would be that
- Ahikers don't eat beef.
- Bgrazing cattle excrete negative externalities on the trail that make hiking less pleasant.
- Cranchers are insensitive to the recreational use of public lands.
- Dcattle should not be allowed to graze on public property.
71Which of the following could be associated with positive consumption externalities?
(i) Child immunizations (insuring that the general population is vaccinated against communicable diseases.)
(ii) Primary and secondary education.
(iii) Technology spillovers between industries.- A(i) and (ii) only.
- B(i) and (iii) only.
- C(ii) and (iii) only.
- D(i), (ii) and (iii)
72Air pollution creates a negative externality. As such,
- Asocial welfare is optimal when all air pollution is eliminated.
- Bwelfare will be enhanced when some, but not all, air pollution is eliminated.
- Cgovernments should encourage all private firms to reduce air pollution by 10%
- Dall polluting firms should be carefully regulated for zero pollution.
73Negative externalities create a misallocation of resources because
- Amarginal social benefit equals marginal social cost at the level of output exchanged in private
markets. - Bmarginal private cost exceeds marginal social benefit at the level of output exchanged in private
markets. - Cmarginal social cost exceeds marginal private benefit at the level of output exchanged in private
markets. - Dmarginal private benefit exceeds marginal private cost at the level of output exchanged in private
markets.
- Amarginal social benefit equals marginal social cost at the level of output exchanged in private
74Positive externalities create a misallocation of resources because
- Amarginal social cost exceeds marginal private cost at the level of output exchanged in private
markets. - Bmarginal social benefit exceeds marginal private cost at the level of output exchanged in private
markets. - Cmarginal private benefit exceeds marginal social benefit at the level of output exchanged in private
markets. - Dmarginal social cost exceeds marginal private benefit at the level of output exchanged in private
markets.
- Amarginal social cost exceeds marginal private cost at the level of output exchanged in private
75If not internalized, a negative production externality will cause a market to
- Aproduce less than is socially desirable.
- Bproduce more than is market optimal.
- Cproduce exactly the amount that is market optimal.
- Dproduce more than is socially desirable.
76In a market that is affected by a negative production externality, the optimum level of output is __________ the free market level of output and the optimum price is __________ the free market price.
- Agreater than, less than
- Bgreater than, greater than
- Cless than, less than
- Dless than, greater than
77Internalizing a negative production externality will cause the supply curve faced by an industry to
- Ashift to the right.
- Bshift to the left.
- Cexpand.
- Dremain unchanged if the government eliminates the externality.
78Internalizing a negative production externality will cause an industry to _________ the quantity it supplies to the market and ________ the price of the good produced.
- Adecrease, decrease
- Bdecrease, increase
- Cincrease, decrease
- Dincrease, increase
79If not internalized, a positive production externality will cause a market to
- Aproduce more than is socially desirable.
- Bproduce more than is market optimal.
- Cproduce less than is socially desirable.
- Dproduce exactly the amount that is market optimal.
80________ suggests that under the right conditions the private market can be effective in dealing with externalities.
- AThe "invisible hand"
- BThe law of diminishing social returns
- CThe Coase Theorem
- DTechnology policy
81Tradable pollution permits
(i) allow markets to more efficiently allocate scarce 'clean air' resources.
(ii) could potentially be a source of revenue to the firms who own them.
(iii) eventually lead to an efficient elimination of all pollution.- Aall of the above
- B(iii) only.
- C(i) and (iii) only.
- D(i) and (ii) only.
82According to the Coase theorem, private solutions to externalities can occur when
(i) bargaining/transactions costs are low because the number of parties involved is small. (ii) air pollution is a problem.
(iii) bargaining/transactions costs are low because the number of parties involved is large. (iv) property rights are clearly assigned.
(v) resources are owned by the government.- Aall of the above
- B(i) and (ii) only
- C(iii) and (v) only
- D(ii) and (iii) only
- E(i) and (iv) only
83Neither public goods nor common resources are
- Aexcludable, but only public goods are not rival in consumption.
- Bexcludable, but only common resources are not rival in consumption.
- Crival in consumption, but only public goods are not excludable.
- Drival in consumption, but only common resources are not excludable.
84Which of the following quotations illustrates the Tragedy of the Commons?
- A“A bird in the hand is worth two in the bush.”
- B“The only difference between the rich and other people is that the rich have more
money.” - C“What is common to many is taken least care of, for all men have greater regard for what
is their own than for what they possess in common with others.” - DAnyone who is not a socialist before he is 30 has no heart; anyone who is still a
socialist after he is 30 has no head.”
85An overcrowded beach is an example of
- Aa positive externality.
- Ba Tragedy of the Commons.
- Can environmentally inefficient allocation of resources.
- Dan economically unfair allocation of resources.
86The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. We might expect that
- Aover time, the aquifer is likely to be overused.
- Beach farmer has a sufficient incentive to conserve the water.
- Cstate governments have an incentive to insure that their farmers do not overuse the water.
- Dresources would be used more efficiently if the government paid for the pumps farmers
use to get the water.
87If the use of a common resource is not regulated,
- Ano one can enjoy it.
- Bit will tend to be underused.
- Cproperty rights will be clearly defined.
- Dit will be overused.
88Each of the following would be considered a common resource except
- Aclean air.
- Bcongested nontoll roads.
- Cnational defense.
- Dopen grazing land.
89A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except
- AThe toll provides an incentive for commuters to drive at times other than rush hour.
- BThe toll provides an incentive for commuters to use public transit rather than driving.
- CThe toll provides an incentive for commuters to drive more fuel-efficient cars.
- DThe toll provides an incentive for commuters to car-pool.
90Which of the following is not an advantage of road tolls as a way to reduce traffic?
- AThey charge people based on consumption.
- BThey can help bring usage closer to its optimal level.
- CRates can differ according to the time of day.
- DThe administrative costs of collecting the tolls are zero, especially for local country roads.
91Because elephants roam freely in many countries in Africa, each individual African elephant poacher has
- Aa strong incentive to kill as many elephants as he can find.
- Ba strong incentive to protect the elephants.
- Cthe ability to save the elephants.
- DNone of the above is correct.
92The commercial value of ivory is a threat to the elephant, but the commercial value of beef is a guardian of the cow. This is because
- Athe cow is raised in developed countries, while the elephant lives primarily in
less-developed countries. - Bcows are private goods, while elephants tend to roam freely without owners.
- Ccows and elephants are public goods, but ivory is nonrival.
- Divory is nonrival and nonexclusive, but beef is rival and exclusive.
- Athe cow is raised in developed countries, while the elephant lives primarily in
93On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would argue that
- Aevery electric customer has an incentive to prevent the system from overloading, so this
voluntary approach is the most efficient. - Bit would be more efficient if the electric company raised its rates for electricity at peak
times. - Ct would be more efficient to have a lottery to decide who had to cut back their use of
electricity at peak times. - Dit would be more efficient to force everyone to cut their usage of electricity by the same
amount.
- Aevery electric customer has an incentive to prevent the system from overloading, so this
94Bill owns three acres of beautiful wooded land. When Bill decides to move away to be closer to his grandchildren, he donates the three acres of land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees. This state park
- Awill tend to be overused because it is nonexcludable.
- Bis a common resource when it becomes crowded on sunny summer weekends.
- Cis rival in consumption when it becomes crowded on sunny summer weekends.
- DAll of the above are correct.
95Markets do not ensure that the air we breathe is clean because
- Aclean air has no value.
- Bthe government prevents markets from doing so.
- Cproperty rights are not well established for clean air.
- Dclean air is impossible to produce .
96Consider the following problems: Overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of some wild animals. What do these problems have in common?
- APrivate markets could easily solve them if governments left the markets alone.
- BThey would all go away if the government sponsored an intensive public-information
campaign. - CThey are all the result of a failure to establish clear property rights over something of
value. - DThey are all the result of a failure of corrective taxes.
97When the absence of property rights causes a market failure, the government can potentially solve the problem
- Aby clearly defining property rights.
- Bthrough regulation over the use of the property.
- Cby supplying the good itself.
- DAll of the above are correct.
98A common theme among examples of market failure is
- Athe good being provided harms society in some systematic way.
- Bsome item of value does not have an owner with the legal authority to control it or trade
it in markets. - Ccost-benefit analysis will show that private markets should provide the goods and
services. - Dgovernment intervention decreases the social benefits.
99Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?
- Ato prevent overuse, underproduction, and achieve higher efficiency in resource use
- Bto decrease taxes and increase revenues according to “supply-side” economics
- Cto fight poverty
- Dto increase consumption of these things
100In which of the following examples are property rights not well established?
- AAnthony chooses to ride his bike to work rather than drive his car.
- BGroups of students play loud music in the open area between the dorms.
- CSue reads a book on her patio.
- DExecutives discuss corporate strategy in the company boardroom.
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- Quiz on Micro pt 2, created by Derek Lasky on 20/02/2018.
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- Derek Lasky
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