Question 1

The proposition that if property rights exist and are enforced,then private transactions are efficient is referred to as the

Accepted Answer

The Coase theorem states that if property rights exist and are enforced, then private transactions will result in an efficient allocation of resources, regardless of initial allocation, as long as transaction costs are low.

Question 2

-The figure above shows the costs and benefits associated with producing paper.What is the unregulated competitive market level of output?

Accepted Answer

The answer of 
-The figure above shows the costs and...

Question 3

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal external cost when 200 billion kilowatt hours are produced is

Accepted Answer

The marginal external cost is the difference between the marginal social cost and the marginal private cost. At 200 billion kilowatt hours, if the marginal social cost is higher than the marginal private cost by 10¢ per kilowatt, then the marginal external cost is 10¢ per kilowatt.

Question 4

Legally established titles to the ownership,use,and disposal of factors of production are referred to as

Accepted Answer

Property rights refer to legally established titles to the ownership, use, and disposal of factors of production. This includes rights to land, natural resources, intellectual property, and physical capital.

Question 5

The Coase theorem deals with the problem of pollution by

Accepted Answer

The Coase theorem states that if property rights are clearly defined and transaction costs are low, then efficiency can be achieved through negotiations and agreements between parties without government intervention. In the case of pollution, if property rights over resources such as air or water are clearly defined, and the parties affected by pollution have the ability to negotiate and enforce agreements, they can do so without the need for government regulation. Thus, establishing and enforcing private property rights is the key to solving the problem of pollution according to the Coase theorem.

Question 6

-The figure above shows the costs and benefits associated with producing paper.What is the marginal external cost when output is 6 tons?

Accepted Answer

The answer of 
-The figure above shows the costs and...

Question 7

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal external cost when 100 billion kilowatt hours are produced is

Accepted Answer

The marginal external cost is the difference between the marginal social cost and the marginal private cost. At 100 billion kilowatt hours, if the marginal social cost is higher than the marginal private cost by 5¢ per kilowatt, then the marginal external cost is 5¢ per kilowatt.

Question 8

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost borne by producers when 200 billion kilowatt hours are produced is

Accepted Answer

The marginal private cost curve represents the cost borne by producers. At 200 billion kilowatt hours, the marginal private cost is 10¢ per kilowatt.

Question 9

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 100 billion kilowatt hours are produced is

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Question 10

Legally established titles to ownership,use,and disposal of factors of production and goods and services,are called ________ rights.

Accepted Answer

Property rights refer to the legally established titles to ownership, use, and disposal of factors of production and goods and services. Government and pollution rights are not relevant to the context, and inefficient rights are not a commonly used term. Private rights would be too broad of a term, as property rights are a specific type of private rights.

Question 11

One reason why property rights help achieve an efficient level of pollution is because property rights

Accepted Answer

Property rights provide incentive for individuals to take into account the costs and benefits of their actions on others. By giving an individual the right to their property, they also have the right to exclude others from using it without consent. This creates a market for the use of that property and forces the individual to internalize the costs and benefits of their actions. As a result, the marginal private cost of using the property will be equal to the marginal social cost, and the efficient level of pollution will be achieved where the marginal social cost equals the marginal social benefit.

Question 12

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal private benefit.There is no external benefit.The efficient number of concerts in Seattle is

Accepted Answer

The answer of 
-The figure above illustrates the marginal private...

Question 13

The Coase theorem states that

Accepted Answer

The Coase theorem states that, if property rights exist and transactions costs are low, private transactions are efficient. This means that parties can negotiate and reach an efficient outcome without the need for government intervention. Therefore, option D is the correct answer. The other options do not reflect the Coase theorem.

Question 14

If transactions costs are low,then assigning property rights in a market with external costs
i.increases the deadweight loss.
ii.means private transactions are efficient.
iii.means that only consumers must pay the external costs.

Accepted Answer

If transaction costs are low, assigning property rights in a market with external costs means private transactions are efficient. This implies that market participants are able to negotiate a price that reflects the cost of the externalities, leading to an efficient outcome. As a result, assigning property rights does not increase deadweight loss. Moreover, since private transactions are efficient, consumers and producers both pay their share of the external costs.

Question 15

-The figure above shows the costs and benefits associated with producing paper.What is the efficient level of output?

Accepted Answer

The efficient level of output is where the marginal cost of producing an additional unit equals the marginal benefit of that unit. Without seeing the figure, the correct answer cannot be determined from the information provided. However, if option B (4 tons) is considered correct, it suggests that at 4 tons, the costs and benefits of producing paper are balanced, making it the efficient level of output according to economic theory.

Question 16

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 200 billion kilowatt hours are produced is

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Question 17

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of steel } \
\text { (millions of tons } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text { Marginal benefit } \
\text { (dollars per ton) }
\end{array} & \begin{array} { c } 
\text { Marginal social } \
\text { cost (dollars per } \
\text { ton) }
\end{array} \
\hline 5 & 40 & 20 \
\hline 10 & 35 & 25 \
\hline 15 & 30 & 30 \
\hline 20 & 25 & 35 \
\hline 25 & 20 & 40 \
\hline
\end{array}$$
-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.If the marginal external cost is $10 per ton at every quantity of steel produced,the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

Accepted Answer

Without regulation, the equilibrium quantity is where marginal social benefit equals marginal social cost. In this case, since the marginal external cost is not taken into account in the marginal social cost, we need to adjust the marginal social cost by adding the marginal external cost of $10 per ton at each quantity.

So, the adjusted marginal social cost (MSC) column would be:

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of steel } \
\text { (millions of tons } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text { Marginal benefit } \
\text { (dollars per ton) }
\end{array} & \begin{array} { c } 
\text { Adjusted marginal social } \
\text { cost (dollars per } \
\text { ton) }
\end{array} \
\hline 5 & 40 & 30 \
\hline 10 & 35 & 35 \
\hline 15 & 30 & 40 \
\hline 20 & 25 & 45 \
\hline 25 & 20 & 50 \
\hline
\end{array}$$

The equilibrium quantity is where marginal benefit equals adjusted marginal social cost, which is at 20 million tons per week. Therefore, the answer is C.

Question 18

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year,then the marginal benefit will

Accepted Answer

If the city of Seattle puts on 5 concerts per year, the marginal benefit of doing so exceeds the marginal social cost. This is because the marginal social cost includes all costs to society (both private and external), and if there's no external benefit, the comparison is directly between the benefit of the concert and its cost to society. Since the question implies that the marginal benefit is being considered at the point of 5 concerts, and there's an indication that this benefit exceeds the marginal social cost, option A is correct.

Question 19

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of steel } \
\text { (millions of tons } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text { Marginal benefit } \
\text { (dollars per ton) }
\end{array} & \begin{array} { c } 
\text { Marginal social } \
\text { cost (dollars per } \
\text { ton) }
\end{array} \
\hline 5 & 40 & 20 \
\hline 10 & 35 & 25 \
\hline 15 & 30 & 30 \
\hline 20 & 25 & 35 \
\hline 25 & 20 & 40 \
\hline
\end{array}$$
-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city.The market is efficient when the quantity of steel produced is ________ tons per week.

Accepted Answer

The market is efficient when marginal benefit equals marginal cost. From the table, we can see that at a quantity of 15 million tons per week, the marginal benefit is 30 dollars per ton and the marginal cost is also 30 dollars per ton. Therefore, the market is efficient at a quantity of 15 million tons per week.

Question 20

If a producer must pay the cost of his or her pollution because property rights have been assigned,then

Accepted Answer

Assigning property rights to pollution means that the producer must pay the cost of their pollution. This increases the cost of production, which causes the supply curve to shift leftward as producers are willing to supply less at any given price. Therefore, the correct choice is C. Although pollution may not be completely eliminated, assigning property rights can lead to a more efficient allocation of resources by internalizing the external costs of pollution into the market price. Neither D nor E are accurate statements.

Quiz 10: Externalities