question

Using Figure 9.1, assume point E represents the optimal mix of output. The market mechanism is likely to result in a mix of output represented by point

answer

D because the market mechanism tends to overproduce private goods

question

When firms have the ability to change the market price of a good or service, the market failure involved is

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Market power

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The term externalities refers to:

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All costs and benefits of a market activity borne by a third party

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An emission charge is a:

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Fee imposed on polluters based on the quantity of pollution they impose on society

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The federal government's tax-and-transfer system is justified because of concerns about:

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Inequity

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Concerns about the fairness of the distribution of output focus on

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Inequity

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An emission charge increases:

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Private marginal cost and thus induces lower output

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The market underproduces public goods because:

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People are less willing to pay for public goods than for private goods

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The government uses _____ to alter the distribution of income

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Taxes and transfers

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Private costs are identified as

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The costs of an economic activity borne directly by the immediate producer or consumer

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If external benefits exist:

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Market demand will understate social demand

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If a firm is forced to internalize pollution costs, this will cause

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An upward shift in the MC curve

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Which of the following leads to market failure?

answer

Market power

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When public goods are marketed like private goods

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Too few goods are produced

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Antitrust laws address

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Market power

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In Table 9.1, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 25 to 10 PPM?

answer

$2

question

The use of emission charges to control pollution can impact all of the following except a firm's

answer

Lease payment

question

The HEADLINE article in the text titled \"Secondhand Smoke Debate Over\" says that heart disease and cancer are two health issues related to secondhand smoke. Secondhand smoke is an example of:

answer

An externality

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Based on Figure 9.2:

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There are external costs associated with cigarette smoking

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Which of the following is most likely a private good

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Cars

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A completely successful emission fee:

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Shifts the private MC curve to the same position as the social MC curve

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Taxes and transfers in the United States are an attempt to address

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Income inequity

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According to the text, what type of market failure provided the justification for the antitrust case against Microsoft

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Market power

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Market failure occurs when:

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An imperfection in the market mechanism prevents an optimal outcome

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Social costs:

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Include private costs

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Externalities are a type of market failure because

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Third parties bear the costs or benefits of a market activity

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Which of the following is used to justify the government's role in providing national parks

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The free-rider dilemma

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Market power is considered to be a market failure because firms with market power

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Produce less output than is socially optimal

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The most important motivation for producers is the desire to

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Maximize economic profits

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Social costs are:

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The full resource costs of an economic activity

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In Table 9.2, which firm has the greatest difference between social costs and private costs?

answer

Firm C

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According to the schedule presented in Table 9.1, which rate of pollution is optimal

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10 PPM

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Which of the following is not considered to be a source of market power for a firm

answer

Antitrust laws

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If a system of emission charges forces firms to internalize all external costs

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Relative prices of polluting activities will rise

question

Which of the following is not considered to be a source of market power for a firm

answer

Antitrust laws

question

One HEADLINE article in the text links secondhand smoke to cancer, heart attacks and strokes. This implies that

answer

There are external costs associated with smoking

question

In Table 9.1, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 35 to 25 PPM

answer

$5

question

Which of the following leads to market failure

answer

Market power

question

Which of the following is not an income transfer

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Food stamps

question

An emission charge can be used to

answer

Reduce the difference between social and private costs

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Which of the following is most likely a public good

answer

A park

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assume point D represents the optimal mix of output. The market mechanism is likely to produce the mix of output represented by point

answer

...

question

The costs of lead contamination have been estimated to be $1 billion for medical care of those sickened by lead, plumbing repairs and reduced earnings of those affected by lead. This $1 billion can best be classified as

answer

...

question

Which of the following prohibits price discrimination

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...

question

If the economy relies entirely on markets to answer the WHAT question, it tends to

answer

Overproduce private goods and under produce public goods

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The distinction between public goods and private goods is based on

answer

The link between payment and consumption

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Which of the following created an agency to identify anticompetitive practices

answer

The Federal Trade Commission Act

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When making a production decision, firms attempt to balance

answer

...

question

Which of the following is not a goal of macro intervention

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...

question

When the economy experiences unemployment, there is

answer

...

question

In Figure 9.3, if pollution costs are external, the rate of output will be

answer

320

question

A firm that incurs an emissions charge for polluting will install more pollution control equipment only if the

answer

...

ECO Chapter 9

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