Question : 11) The production of electricity creates pollution. When deciding how : 1238640

11) The production of electricity creates pollution. When deciding how much electricity to buy, customers ________ the cost of pollution. When deciding how much electricity to buy, producers ________ the cost of pollution.

A) take into account; take into account

B) do not take into account; do not take into account

C) take into account; do not take into account

D) do not take into account; take into account

E) None of the above answers is correct.

12) Marginal private cost

A) is always zero if there is an external cost.

B) equals the marginal social cost only if the marginal external cost is positive.

C) is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service.

D) the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service.

E) the cost of producing an additional unit of a good or service that is paid by the entire society.

13) A private cost is a cost of production that is

A) borne by the producer of a good.

B) measured in marginal terms.

C) borne by someone other than the producer of a good.

D) measured in total terms.

E) the same as an external cost.

14) The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the marginal

A) external cost.

B) private cost.

C) social cost.

D) public cost.

E) None of the above answers is correct.

15) The difference between private cost and social cost is that

A) social cost only considers the external cost borne by society.

B) social cost only considers the cost borne by people other than the producer.

C) private cost only considers the cost borne by producers of the good.

D) social cost also includes any external benefit whereas private cost excludes all external benefits.

E) there is no difference; the terms refer to the same cost.

16) Harry, the owner of a beauty salon, hires a new hair stylist. The wages paid to the new stylist are

A) a private cost and not an external cost.

B) an external cost and not a private cost.

C) both a private cost and an external cost.

D) neither a private cost nor an external cost.

E) only a private benefit because people want their hair styled.

17) Joanne rents a TV production studio to produce an extra hour of a TV show. The rent is

A) a private cost and not an external cost.

B) an external cost and not a private cost.

C) both a private cost and an external cost.

D) neither a private cost nor an external cost.

E) a private benefit because viewers will benefit from watching the extra hour of the show.

18) For a product with an external cost, the supply curve

A) represents the various quantities people can buy.

B) is the same as the marginal private cost curve.

C) is the same as the marginal social cost curve.

D) is the same as the marginal external cost curve.

E) is undefined.

19) For a firm, its labor costs are

A) a marginal benefit.

B) a private cost.

C) an external cost.

D) Both answers A and C are correct.

E) Both answers A and B are correct.

20) The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

A) external cost.

B) private cost.

C) social cost.

D) social benefit.

E) None of the above answers is correct.