Quiz 5 of ECON251 Purdue University In Tutorial Library

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TITLE: Quiz 5 of ECON251 Purdue University

UNIVERSITY / INSTITUTE: Purdue University

CLASS / COURSE: Economics

QUESTION DESCRIPTION:

Quiz 5:
 
(Points: 1)   
  Refer to Figure 5.1 for the questions below. 
 
Figure 5.1
 
 
In figure 5.1 the firm wants to produce:
 
 
a. a. Q1.
b. b. Q2.
c. c. Q3.
d. d. Q4. 
 
 
 
 
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2. 
(Points: 1)   
  A public good differs from a private good in that:
 
 
a. a. only the government can produce public goods.
b. b. if a person does not pay for the good, they can be kept from enjoying the benefits of a public good.
c. c. if you consume a unit of a public good, there is one less for everyone.
d. d. no one can be kept from enjoying the benefits of a public good and one person using it does not reduce the amount available for everyone else. 
 
 
 
 
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3. 
(Points: 1)   
  Refer to Figure 5.1 for the questions below. 
 
Figure 5.1
 
 
Figure 5.1 shows:
 
 
a. a. a positive externality.
b. b. a negative externality.
c. c. common property.
d. d. a public good. 
 
 
 
 
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4. 
(Points: 1)   
  The Coase theorem is that:
 
 
a. a. government intervention is always needed if externalities are present.
b. b. assigning property rights is the only thing the government should do in a market economy.
c. c. if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.
d. d. a free market equilibrium is always the best solution. 
 
 
 
 
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5. 
(Points: 1)   
  The market demand for public goods can be determined by:
 
 
a. a. by adding up how much each citizen is willing to buy at every possible price.
b. b. multiplying how much each citizen is willing to buy at every price.
c. c. adding up how much each consumer will pay for each unit of the public good.
d. d. multiplying how much each consumer will pay for each unit of the public good. 
 
 
 
 
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6. 
(Points: 1)   
  An externality is:
 
 
a. a. a benefit realized by the purchaser of a good or service.
b. b. a cost paid for by the producer of a good or service.
c. c. a benefit or cost felt by someone who is not a producer or consumer of a good or service.
d. d. anything that is external or not relevant to the production of a good or service. 
 
 
 
 
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7. 
(Points: 1)   
  Refer to Figure 5.1 for the questions below. 
 
Figure 5.1
 
 
In figure 5.1 the efficient output is:
 
 
a. a. Q1.
b. b. Q2.
c. c. Q3.
d. d. Q4. 
 
 
 
 
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8. 
(Points: 1)   
  Government can increase the consumption of a good or service that has positive externalities by:
 
 
a. a. subsidizing the production of the good or service so that the supply is increased and market price is reduced.
b. b. taxing the production and consumption of the good or service.
c. c. convincing everyone to consume the good.
d. d. by assigning property rights. 
 
 
 
 
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9. 
(Points: 1)   
  An example of a positive externality would be:
 
 
a. a. cleaning up the sidewalk on your block.
b. b. graduating from college.
c. c. repainting the house you live in.
d. d. all of these. 
 
 
 
 
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10. 
(Points: 1)   
  If your neighbor burns auto tires in the yard and you can smell them and cannot see sunlight because of the black smoke, you are experiencing:
 
 
a. a. a positive externality.
b. b. a negative externality.
c. c. a private cost.
d. d. a private benefit. 
 
 
 
 
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SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Microeconomics

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