Deck 3: Benefits and Costs, Supply and Demand

Question 1

As long as marginal willingness is _________, total willingness will ____________.

A)declinling; decline
B)increasing; decrease
C)positive; increase
D)decreasing; decrease

Answer 1

C

Question 2

All of the following are difficulties with using demand curves to estimate environmental benefits, except

A)demand curves are constructed based on ability to pay.
B)consumers are sometimes unaware of the benefits of environmental quality.
C)downward sloping demand curves inaccurately imply declining benefits.
D)benefits are often difficult to measure when it concerns environmental questions.

Answer 2

C

Question 3

Marginal willingness to pay ____________.

A)is the consumer's additional willingness to pay for one more unit of the good
B)is the consumer's additional ability to pay for one more unit of the good
C)is the consumer's ability to pay for consumption of all units of the good
D)is the consumer's willingness to pay for consumption of all units of the good

Answer 3

A

Question 4

The determination of how much an individual is willing to pay for a good or service is comprised of both _________ and ________________.

A)current environmental quality; potential environmental impact
B)individual values; ability to pay
C)collective values; unemployment rate
D)societal values; consumer price index

Question 5

Aggregate demand curves are _________________.

A)not of interest in environmental economics because it is a microeconomic field
B)unrelated to individual demand curves
C)a summation of individual demand curves
D)are not related to individual or aggregate willingness to pay

Question 6

Private costs are ____________, while social costs are ____________.

A)costs experienced by the consumer making the decision; all of the costs of the action
B)costs experience by the private sector; costs experience by the public sector
C)costs that are charged by the private sector; costs that are charged by the public sector
D)all of the costs of a transaction including social costs; only the costs represent damage to the environment

Question 7

The value of a good or service is measured by _________________.

A)willingness to pay
B)the sacrifice a person experiences in terms of other goods
C)the sacrifice a consumer experiences in generalized purchasing power
D)all of the above

Question 8

One criterion for evaluating environmental policies is whether or not they generate ________ for individuals, firms and industries to engage in ________.

A)disincentives; expansion activities
B)incentives; expansion activities
C)disincentives; abatement activities
D)incentives; R&D activities

Question 9

The notion of diminishing willingness to pay reveals that as____________.

A)units consumed increases, willingness to pay for additional units increases
B)units consumed increases, willingness to pay for additional units stays the same
C)units consumed increases, willingness to pay for additional units decreases
D)ability to pay increases, the number of units consumed increases

Question 10

Willingness to pay is graphed __________________.

A)as a curve that slopes downward as quantity increases.
B)as a curve that slopes upward as quantity increases.
C)as a horizontal line.
D)as a stepwise function that cannot be translated into a curve.

Question 11

In the following figure, the total willingness to pay for the 10^th unit of the good is ________.

A)$12
B)$20
C)$160
D)$200

Question 12

In the following figure the total cost of producing the 500^th unit of output is ________.

A)$550
B)$150,000
C)$212,500
D)$275,000

Question 13

Marginal willingness to pay ____________.

A)is the consumer's additional willingness to pay for one more unit of the good
B)is the consumer's additional ability to pay for one more unit of the good
C)is the consumer's ability to pay for consumption of all units of the good
D)is the consumer's willingness to pay for consumption of all units of the good

Question 14

In the following figure, the marginal willingness to pay for the 10^th unit of the good is ________.

A)$12
B)$20
C)$160
D)$200

Question 15

In the following figure the marginal cost of producing the 500^th unit of output is ________.

A)$500
B)$550
C)$150,000
D)$212,500

Question 16

The marginal cost curve is affected by ________.

A)time
B)the price of inputs
C)technology
D)all of the above

Question 17

Opportunity cost _______________.

A)is represented by the area under the marginal cost curve
B)is an upward sloping curve that intersects with the demand curve
C)represents the maximum value of other outputs that could have been produced with the same resources
D)all of the above

Question 18

The following figure shows the impact of technological change on the marginal cost of producing a certain good.With MC₁ the total cost of producing Q* units is equal to ________.

A)areas a + b + c
B)areas b + c
C)area b
D)area c

Question 19

The benefits a consumer acquires from consuming a unit of a good is equal to ________.

A)willingness to pay minus the cost of production
B)the price that a consumer is willing to pay
C)the profit associated with the good
D)the area above the demand curve

Question 20

The following figure shows the impact of technological change on the marginal cost of producing a certain good.Producing Q* units with the new technology reduces total cost by an amount equal to ________.

A)area a
B)area b
C)area c
D)areas a + b

Question 21

One important characteristic of all marginal cost curves is that ________.

A)they all intersect the Y axis
B)although they may initially decline, they eventually increase
C)they all eventually decline
D)they are stepwise functions with lumpy investment features

Question 22

Technological progress _______________.

A)results in a downward shift of the marginal cost curve
B)results in an upward shift of the marginal cost curve
C)results in an upward shift of the willingness to pay curve
D)results in a downward shift of the willingness to pay curve

Question 23

Total costs are found by ________.

A)the intersection of the marginal cost and marginal benefits curve
B)the area under the marginal willingness to pay curve
C)multiplying the marginal cost by the number of units
D)the sum of the marginal cost for each unit

Question 24

Table 3.0 Coffee Consumption

Refer to Table 3.0.What is the total willingness to pay for 4 cups of coffee?

A)$3.50
B)$14.00
C)$21.25
D)$15.75

Question 25

The marginal cost curve of a firm ________.

A)represents the firm's production function
B)represents the firm's supply curve
C)represents the industry supply curve
D)none of the above

Question 26

Table 3.0 Coffee Consumption

Refer to Table 3.0.What are the total benefits of consuming 3 cups of coffee?

A)$3.75
B)$17.75
C)$ 5.75
D)indeterminate, the table does allow the calculation of benefits

Question 27

Table 3.1 Production Schedule for Widgets

Refer to Table 3.1.According to the equimarginal principle, in order to minimize the cost of producing 100 units, how would we distribute production between plants A and B?

A)0 units at plant A; 100 units at plant B
B)20 units at plant A; 80 units at plant B
C)38 units at plant A; 62 units at plant B
D)50 units at plan A; 50 units at plant B

Question 28

Table 3.0 Coffee Consumption

Refer to Table 3.0.At a price of $3.00, how many cups of coffee would this individual consume?

A)2
B)6
C)4
D)There is not enough information in the table to determine the answer.

Question 29

Table 3.2 Marginal Cost Functions of an Industry with 4 Firms

Refer to Table 3.2.At a market price of $4.00, what is industry supply?

A)0
B)48 units
C)$ 192.00
D)indeterminate, the table does reveal aggregate supply

Question 30

Marginal Willingness to Pay
In a 3 Person Market

When market price is $16, aggregate demand is ___________.

A)7 units
B)44 units
C)$112
D)indeterminate, the table does reveal aggregate demand