Question 1

Compared to ideal economic efficiency,when the production of a good generates external costs,competitive markets will likely result in an output that is too

Accepted Answer

The answer of Compared to ideal economic efficiency,when the production...

Question 2

Students in a class are assigned to groups to work on a project.A grade will be given for each project,and everyone in the group will receive that grade.For the members of a particular group,the grade is a

Accepted Answer

The grade received by the members of the group is a public good, as it is available to all members of the group and one member's use of the grade does not diminish its availability to others.

Question 3

Suppose external benefits are present in a market which results in the actual market price of $62 and market output of 3,000 units.How does this outcome compare to the efficient,ideal equilibrium?

Accepted Answer

The answer of Suppose external benefits are present in a...

Question 4

In a competitive market,if the production process involves an external benefit,the market will

Accepted Answer

The answer of In a competitive market,if the production process...

Question 5

When production of a good generates external benefits,the

Accepted Answer

When production of a good generates external benefits, the consumers in the market only consider their private benefits while making the decision, which causes a lower demand for the good than what would have been the case if the external benefits were taken into account. Therefore, the demand curve for the good will understate the true social benefits from consumption of the good.

Question 6

Which of the following is the best example of a public good?

Accepted Answer

A public good is a good that is non-excludable and non-rivalrous in consumption, meaning that it is available for everyone to use and its use by one person does not diminish its availability for others. National defense fits this definition, as it is available to all citizens and one person's use of national defense does not reduce its availability to others. Long distance telephone service, an amusement park, and the electric service of a public utility are all excludable and/or rivalrous, and therefore do not meet the definition of a public good.

Question 7

Suppose the firms in the chemical industry are allowed,free of charge,to dump harmful products into rivers.How will the price and output of the chemical products in a competitive market compare with their values under conditions of ideal economic efficiency?

Accepted Answer

The answer of Suppose the firms in the chemical industry...

Question 8

When external costs are present in a market,

Accepted Answer

The answer of When external costs are present in a...

Question 9

Consider two goods--one that generates external benefits and another that generates external costs.A competitive market economy would tend to produce

Accepted Answer

In a competitive market economy, firms only take into account private costs and benefits while making production decisions. They do not consider the external costs or benefits that are incurred by society. Therefore, the competitive market would produce too little of the good that generates external benefits and too much of the good that generates external costs. This is because in the case of the first good, the firm will not produce as much as the total social demand (which includes the external benefits) and in the case of the second good, the firm will produce more than the total social demand (which includes the external costs).

Question 10

In a competitive market,if the production process involves an external cost,such as pollution of the environment,the market will

Accepted Answer

The answer of In a competitive market,if the production process...

Question 11

A good for which it is impossible or at least very costly to exclude nonpaying customers from receiving the good and for which many individuals can share in the consumption of the same unit of the good is called a

Accepted Answer

A public good is a type of good that is non-excludable and non-rival. This means that it is difficult or costly to exclude non-paying individuals from consuming the good, and many individuals can benefit from the consumption of the same unit without diminishing its availability to others. Examples of public goods include national defense, street lighting, and public parks.

Question 12

When external benefits are present in a market,

Accepted Answer

When external benefits are present in a market, producers do not take these benefits into account while deciding how much to produce, leading to less of the good being produced than the amount consistent with economic efficiency. This is because the social benefit exceeds the private benefit received by the producer, and as a result, there is an under-allocation of resources to the production of the good.

Question 13

A good is considered to be a public good if it

Accepted Answer

A public good is a good that is both nonrival-in-consumption, meaning that the consumption of the good by one person does not reduce the amount of the good available for others to consume, and nonexcludable, meaning that it is difficult or impossible to prevent people who have not paid for the good from consuming it. Public goods are often provided by the government, but they can also be provided by private organizations or individuals.

Question 14

What are the two distinguishing characteristics of a public good?

Accepted Answer

The two distinguishing characteristics of a public good are nonrivalry in consumption, meaning that one person's consumption of the good does not diminish its availability for others to consume, and nonexcludability, meaning that it is difficult or impossible to exclude someone from consuming the good once it is provided. Option B is incorrect because indivisibility in production is not a defining characteristic of public goods, and excludability of nonpaying customers goes against the idea of nonexcludability. Option C is also incorrect as not all public goods are provided by the government or funded through taxation. Option D is incorrect as mass production and comparative advantage are not defining characteristics of public goods.

Question 15

A good that is both nonexcludable and nonrival-in-consumption is called a

Accepted Answer

A good that is nonexcludable means that it is difficult or impossible to provide the good only to those who have paid for it, while a good that is nonrival-in-consumption means that one person's consumption of the good does not diminish the ability of others to consume it. Public goods have these two characteristics, making them available to everyone and allowing everyone to benefit without reducing the availability or quality of the good. Therefore, the correct choice is C, public good.

Question 16

Suppose external costs are present in a market which results in the actual market price of $84 and market output of 320 units.How does this outcome compare to the efficient,ideal equilibrium?

Accepted Answer

The answer of Suppose external costs are present in a...

Question 17

Consider two goods--one that generates external costs and another that generates external benefits.The actual market outcome would

Accepted Answer

For the good generating external costs, the market outcome would result in output higher than the efficient output because the private marginal cost does not account for the external costs generated by the production of the good. This means that the social cost is higher than the private cost and the market produces too much of this good. For the good generating external benefits, the market outcome would result in output lower than the efficient output because the private marginal benefit does not account for the external benefits generated by the consumption of the good. This means that the social benefit is higher than the private benefit and the market produces too little of this good. Therefore, the combined market outcome for both goods would be output that is lower than the efficient output for the good with an external benefit and output that is higher than the efficient output for the good with an external cost.

Question 18

When the consumption of a good generates an external benefit,

Accepted Answer

When the consumption of a good generates an external benefit, the market demand curve will understate the total benefits derived from consumption of the good, and as a result, too little of it will be produced and consumed. Therefore, the correct answer is option D.

Question 19

Compared to ideal economic efficiency,when the production of a good generates external benefits,competitive markets will likely result in an output that is too

Accepted Answer

The answer of Compared to ideal economic efficiency,when the production...

Question 20

Which of the following is the best example of a public good?

Accepted Answer

A television broadcast signal is the best example of a public good because it is non-excludable, meaning that it is impossible or extremely costly to prevent people from enjoying its benefits (anyone with a TV can receive the signal), and it is non-rivalrous, meaning that one person's consumption of the good does not diminish another's ability to enjoy it (multiple people can watch the same program at the same time without impacting one another).

Quiz 5: Difficult Cases for the Market and the Role of Government

Compared to ideal economic efficiency,when the production of a good generates external costs,competitive markets will likely result in an output that is too

Students in a class are assigned to groups to work on a project.A grade will be given for each project,and everyone in the group will receive that grade.For the members of a particular group,the grade is a

Suppose external benefits are present in a market which results in the actual market price of $62 and market output of 3,000 units.How does this outcome compare to the efficient,ideal equilibrium?

In a competitive market,if the production process involves an external benefit,the market will

When production of a good generates external benefits,the

Which of the following is the best example of a public good?

Suppose the firms in the chemical industry are allowed,free of charge,to dump harmful products into rivers.How will the price and output of the chemical products in a competitive market compare with their values under conditions of ideal economic efficiency?

When external costs are present in a market,

Consider two goods--one that generates external benefits and another that generates external costs.A competitive market economy would tend to produce

In a competitive market,if the production process involves an external cost,such as pollution of the environment,the market will

A good for which it is impossible or at least very costly to exclude nonpaying customers from receiving the good and for which many individuals can share in the consumption of the same unit of the good is called a

When external benefits are present in a market,

A good is considered to be a public good if it

What are the two distinguishing characteristics of a public good?

A good that is both nonexcludable and nonrival-in-consumption is called a

Suppose external costs are present in a market which results in the actual market price of $84 and market output of 320 units.How does this outcome compare to the efficient,ideal equilibrium?

Consider two goods--one that generates external costs and another that generates external benefits.The actual market outcome would

When the consumption of a good generates an external benefit,

Compared to ideal economic efficiency,when the production of a good generates external benefits,competitive markets will likely result in an output that is too

Which of the following is the best example of a public good?