Question : 41) Private subsidies granted to producers affect A) the supply side : 1226033

41) Private subsidies granted to producers affect

A) the supply side of the market by shifting the supply curve.

B) the demand side of the market by shifting the demand curve.

C) property rights.

D) transaction costs.

E) both the the supply side of the market and the demand side because they shift both the supply curve and the demand curve.

42) When the government uses a private subsidy in a market with an external benefit, to reach the efficient quantity of production, the subsidy must be equal to the marginal

A) social benefit.

B) cost of production.

C) private benefit.

D) external benefit.

E) external cost.

43) For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced, what must be done?

A) The size of marginal external benefit must be accurately determined.

B) The government must produce the product.

C) Private production and private consumption must both be directly subsidized.

D) The quantity demanded must be decreased to the efficient amount.

E) Private production without the subsidy must be prohibited.

44) If the government provides a subsidy to producers, what is the effect of this policy in a supply and demand diagram?

A) The demand curve shifts leftward and the price rises.

B) The supply curve shifts rightward and the price falls.

C) The supply curve shifts leftward and the price falls.

D) The supply curve shifts leftward and the price rises.

E) The demand curve shifts rightward and the price rises.

45) A government subsidy paid to a firm

i.increases the demand for the good.

ii.has no effect on the supply of the good.

iii.leads to an increase in the equilibrium quantity.

A) i only

B) i and ii

C) ii only

D) iii only

E) i and iii

46) The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

A) 8; $150

B) 8; $300

C) 10; $250

D) 10; $100

E) 10; $150

47) The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity of ________ units is inefficient because ________.

A) 8; marginal benefit exceeds marginal cost

B) 8; marginal cost exceeds marginal benefit

C) 10; marginal cost exceeds marginal benefit

D) 10; marginal social benefit exceeds marginal benefit

E) 10; marginal external benefit exceeds marginal social benefit

48) The figure above shows the market for a good with an external benefit. When 6 units are produced, marginal social benefit equals ________ and marginal external benefit equals ________.

A) $200; $150

B) $350; $200

C) $200; $50

D) $350; $150

E) $150; $250

49) The figure above shows the market for a good with an external benefit. The efficient level of production is ________ units because ________.

A) 8; marginal benefit equals marginal cost

B) 8; marginal cost is less than marginal social benefit

C) 10; marginal cost equals marginal social benefit

D) 10; marginal social benefit exceeds marginal benefit

E) 8; marginal benefit equals the marginal external benefit

50) The figure above shows the market for a good with an external benefit. If the government wants to grant a subsidy so that the efficient quantity is produced, the subsidy must equal ________ per unit.

A) $100

B) $150

C) $250

D) $300

E) $50