Question :
21.Whenanexternalityispresent,themarketequilibriumis
a.efficient,andtheequilibriummaximizesthetotalbenefittosocietyasawhole.
b.efficient,buttheequilibriumdoesnotmaximizethetotalbenefittoso : 1261405
21.Whenanexternalityispresent,themarketequilibriumis
a.efficient,andtheequilibriummaximizesthetotalbenefittosocietyasawhole.
b.efficient,buttheequilibriumdoesnotmaximizethetotalbenefittosocietyasawhole.
c.inefficient,buttheequilibriummaximizesthetotalbenefittosocietyasawhole.
d.inefficient,andtheequilibriumdoesnotmaximizethetotalbenefittosocietyasawhole.
22.Whenexternalitiesexist,buyersandsellers
a.neglecttheexternaleffectsoftheiractions,butthemarketequilibriumisstillefficient.
b.donotneglecttheexternaleffectsoftheiractions,andthemarketequilibriumisefficient.
c.neglecttheexternaleffectsoftheiractions,andthemarketequilibriumisnotefficient.
d.donotneglecttheexternaleffectsoftheiractions,andthemarketequilibriumisnotefficient.
23.Dioxinemissionthatresultsfromtheproductionofpaperisagoodexampleofanegativeexternalitybecause
a.self-interestedpaperfirmsaregenerallyunawareofenvironmentalregulations.
b.therearefinesforproducingtoomuchdioxin.
c.self-interestedpaperproducerswillnotconsiderthefullcostofthedioxinpollutiontheycreate.
d.toxicemissionsarethebestexampleofanexternality.
24.Ifanaluminummanufacturerdoesnotbeartheentirecostofthesmokeitemits,itwill
a.emitalowerlevelofsmokethanissociallyefficient.
b.emitahigherlevelofsmokethanissociallyefficient.
c.emitanacceptablelevelofsmoke.
d.notemitanysmokeinanattempttoavoidpayingtheentirecost.
25.Whichofthefollowingisanexampleofanexternality?
a.cigarettesmokethatpermeatesanentirerestaurant
b.aflushotthatpreventsastudentfromtransmittingthevirustoherroommate
c.abeautifulflowergardenoutsideofthelocalpostoffice
d.Alloftheabovearecorrect.
26.Whichofthefollowingstatementsisnotcorrect?
a.Governmentpoliciesmayimprovethemarket’sallocationofresourceswhennegativeexternalitiesarepresent.
b.Governmentpoliciesmayimprovethemarket’sallocationofresourceswhenpositiveexternalitiesarepresent.
c.Apositiveexternalityisanexampleofamarketfailure.
d.Withoutgovernmentintervention,themarketwilltendtoundersupplyproductsthatproducenegativeexternalities.
27.Whichofthefollowingrepresentsawaythatagovernmentcanhelptheprivatemarkettointernalizeanexternality?
a.taxinggoodsthathavenegativeexternalities
b.subsidizinggoodsthathavepositiveexternalities
c.Thegovernmentcannotimproveupontheoutcomesofprivatemarkets.
d.Bothaandbarecorrect.
28.Whichofthefollowingisnotcorrect?
a.Marketsallocatescarceresourceswiththeforcesofsupplyanddemand.
b.Theequilibriumofsupplyanddemandistypicallyanefficientallocationofresources.
c.Governmentscansometimesimprovemarketoutcomes.
d.Externalitiescannotbepositive.
29.Researchintonewtechnologiesprovidesa
a.negativeexternality,andtoofewresourcesaredevotedtoresearchasaresult.
b.negativeexternality,andtoomanyresourcesaredevotedtoresearchasaresult.
c.positiveexternality,andtoofewresourcesaredevotedtoresearchasaresult.
d.positiveexternality,andtoomanyresourcesaredevotedtoresearchasaresult.
30.Melissaengagesinanactivitythatinfluencesthewell-beingofabystander.InorderforMelissa’sactivitytogive
a.Melissafailstorecognizetheimpactofheractivityonthebystander’swellbeing.
b.thebystanderfailstorecognizetheimpactofMelissa’sactivityonhisorherwellbeing.
c.thewellbeingofthebystanderisadverselyimpactedbyMelissa’sactivity.
d.Melissaneitherpaysnorreceivesanycompensationforheractivity.
31.Williamengagesinanactivitythatinfluencesthewell-beingofabystander.Inwhichofthefollowinginstancesdoesanexternalityarise?
a.TheimpactofWilliam’sactivityonthebystanderisadverse,andWilliamcompensatesthebystander
b.TheimpactofWilliam’sactivityonthebystanderisadverse,butWilliamfailstocompensatethebystander.
c.TheimpactofWilliam’sactivityonthebystanderisbeneficialandthebystandercompensatesWilliam
d.Externalitiesariseinalloftheabovecases.
32.Inacertaincity,thelocalgovernmentregulatesthedestructionofhistoricbuildingsandprovidestaxbreakstoownersofhistoricbuildingswhorestorethem.Thesegovernmentpolicies
a.reflectthefactthatrestoredhistoricbuildingsconveyapositiveexternality.
b.reflectthefactthatthedestructionofhistoricbuildingsconveysapositiveexternality.
c.arelikelytoworsenthemarketfailurethatisassociatedwithhistoricbuildingsandtherestorationofsuchbuildings.
d.arelikelytodecreasethewell-beingofsocietyasawhole.