Question : 31) Consider an industry producing good X. The quantity of : 1384308

31) Consider an industry producing good X. The quantity of good X produced in a competitive free market will be greater than the socially optimal level if

A) the production of good X generates a positive externality.

B) the consumption of good X generates a positive externality.

C) the production of good X generates a negative externality.

D) the government has imposed a tax on the production of good X.

E) good X is a public good.

32) Consider an industry producing good X. The quantity of good X produced in a competitive free market will be less than the socially optimal level if

A) the consumption of good X generates a negative externality.

B) the consumption of good X generates a positive externality.

C) the production of good X generates a negative externality.

D) the government is subsidizing the production of good X.

E) good X has negative third party effects associated with its consumption.

33) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC1 and MB0, respectively, then there exists

A) a negative external benefit.

B) a negative external cost.

C) a positive external benefit.

D) a positive external cost.

E) no externalities at all.

34) Refer to Figure 16-1. Suppose the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC0 and MB0, respectively, then there exists

A) a negative external benefit.

B) a negative external cost.

C) a positive external benefit.

D) a positive external cost.

E) no externality whatsoever.

35) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC0 and MB1, respectively, then there exists

A) an external benefit.

B) an external cost.

C) an external benefit and an external cost.

D) a social cost that exceeds the private cost.

E) no external benefits or costs.

36) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC0 and MB0, respectively, then

A) the competitive price is too high.

B) the competitive price is too low.

C) the competitive quantity is too high.

D) the competitive quantity is too low.

E) the competitive price and quantity are consistent with allocative efficiency.

37) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC2 and MB0, respectively, then the competitive equilibrium quantity is

A) too low for allocative efficiency.

B) too high for allocative efficiency.

C) consistent with allocative efficiency.

D) not enough information to determine allocative efficiency.

38) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC0 and MB1, respectively, then the competitive equilibrium quantity is

A) too low for allocative efficiency.

B) too high for allocative efficiency.

C) consistent with allocative efficiency.

D) not enough information to determine allocative efficiency.

39) Refer to Figure 16-1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC1 and MB0, respectively, then the competitive equilibrium quantity is

A) too low for allocative efficiency.

B) too high for allocative efficiency.

C) consistent with allocative efficiency.

D) not enough information to determine allocative efficiency.

40) For a production process that involves a positive externality, it is true that

A) a per unit tax could be imposed on the producer to achieve the socially optimal level of production.

B) marginal social benefit is less than marginal private benefit.

C) marginal social cost is more than marginal private cost.

D) without government intervention the market will produce too much of this good.

E) a subsidy to producers could increase production to the socially optimal level.