Question_Doc14_15Dec_8th

Question_Doc14_15Dec_8th

Question

3) Which of the following is most likely to be common
property?

A) a cat in a house

B) farm raised catfish in Alabama

C) tuna in the Pacific Ocean

D) cattle in a Texas ranch

4) Which of the following are most likely to become an
endangered species?

A) animals in the wild

B) domesticated animals

C) animals that people like to keep at home as pets

D) animals that people have property rights to own

5) Endangered species are likely to be

A) private property.

B) common property.

C) both private and common property.

D) neither private nor common property.

6) Protecting endangered species are likely to be

A) a private cost.

B) a public cost.

C) both private and public costs.

D) neither a private nor public cost.

7) Which of the following is TRUE about species in the
world?

A) Most extinct species became extinct within the past 30
years.

B) The majority of extinct species became extinct before
humans appeared.

C) Extinct species became extinct only after human appeared.

D) No species has ever become extinct.

8) The trade-off of saving the spotted owls in the Pacific
Northwest was

A) the loss of salmon in the region.

B) the increase in the number of marbled murrelets.

C) the loss of logging activities by lumber companies.

D) none.

9) Which of the following is most likely to be private
property?

A) bees

B) house flies

C) farm raised chickens

D) winds

10) Wild animals are likely to be

A) private property.

B) endangered species.

C) domesticated by humans.

D) all of the above.

11) The Endangered Species Act is an attempt to

A) protect endangered species against greedy loggers,
farmers, and business people.

B) protect endangered species from the overzealousness of
many environmentalists.

C) protect species endangered because there are no private
property rights on them.

D) prevent some people from earning a good living.

12) For endangered species, the federal government

A) can only protect the animal on federal property because
of common property issues.

B) has the right to regulate activities on private land to
save the species from extinction.

C) turns over the protection of an endangered species to the
state authorities where the species

lives.

D) will capture a pair of animals so that the species does
not become extinct.

13) Saving endangered species

A) benefits all people in society without any trade-off.

B) must involve the loss of another species.

C) may involve a trade-off in terms of the loss of other
economic activities.

D) requires the government to list those species as common
property.

14) The problem associated with endangered populations of
migratory birds is the

A) common property problem.

B) free rider problem.

C) deadweight loss problem.

D) inefficient production problem.

15) The problem of overfishing in waters that are commonly
owned can be solved by

A) the use of the Coase Theorem.

B) establishing property rights for fishing in the waters.

C) subsidizing fishing.

D) allowing the market to ration fish.

16) The problem of overfishing in waters that are commonly
owned can be solved when the

government determines the total amount of fish can be
removed from a given area during each

fishing season. Then the fishermen

A) will not be able to fish.

B) can trade their rights (shares) to fish or not.

C) will externalize their private costs to the government.

D) will lower their private costs to fish.

17) The Endangered Species Act has

A) caused a loss of economic activities on some private
land.

B) saved all endangered species without affecting anyone.

C) further reduced the number of endangered species.

D) had no impact on either the number of endangered species
or other economic activities.

18) Approximately what percentage of the world’s extinct
species became extinct before humans

appeared on earth?

A) 1 percent

B) 10 percent

C) 20 percent

D) more than 99 percent

19) Today, the earth has ________ of all of the species that
have ever lived.

A) less than 1 percent

B) about 50 percent

C) about 99 percent

D) 100 percent

20) “The number of species on earth is decreasing
drastically and economic development is the

main factor for the problem.” Do you agree or disagree?
Why?

21) Why are most endangered species belong to common
property?

1) Which of the following statements best defines private
costs?

A) They are internal in the sense that the firm or household
must explicitly take them into

account.

B) They are costs borne by people other than those who
commit the action.

C) They are synonymous with social costs.

D) They represent explicit costs incurred by business firms
in the private sector.

2) Costs that are borne solely by the individuals who incur
them are called

A) private costs.

B) public costs.

C) social costs.

D) external costs.

3) When the costs of an action are not fully borne by the
two parties engaged in a transaction,

this is called a(n)

A) externality.

B) equilibrium.

C) property right.

D) internal cost.

4) Pollution created by auto exhaust fumes is an example of
a situation in which

A) social costs are greater than private costs.

B) social costs are less than private costs.

C) social costs are equal to private costs.

D) social costs are approaching the shutdown point.

5) An individual who pays for personal auto repair has
incurred a

A) social cost.

B) private cost.

C) negative externality.

D) positive externality.

6) Private costs are the same as

A) implicit costs.

B) external costs.

C) public costs.

D) internal costs.

7) All of the following are private costs of operating an
automobile EXCEPT

A) gasoline for the car.

B) depreciation of the vehicle.

C) car insurance.

D) harm to the environment from emissions.

8) Internal costs are

A) costs borne solely by the individuals who incur them.

B) costs borne by people in the same society as those who
incur them.

C) costs borne by people working in the firm that incurs
them.

D) all costs incurred in the marketplace.

9) To find the social cost of an action, add together

A) the external and accounting costs.

B) the private costs and the internal costs.

C) the external costs and the internal costs.

D) the internal costs and the private opportunity costs.

10) Society must pay the full opportunity cost of any
activity

A) that uses scarce resources.

B) that causes costs to rise.

C) that increases revenues.

D) none of the above.

11) Social costs are

A) costs borne by society whenever a resource-using action
takes place.

B) costs incurred by government and borne by all taxpayers.

C) costs incurred in governmental welfare programs.

D) external costs minus internal costs.

12) The total social cost of production is equal to

A) external cost minus internal cost.

B) internal cost minus external cost.

C) external cost plus internal cost.

D) internal cost plus opportunity cost.

13) There is “too much” steel production if the

A) social costs of steel production are significantly lower
than the private costs.

B) social benefits of steel production are declining.

C) social costs of steel production are significantly higher
than the private costs.

D) social costs of steel production are declining.

14) Social costs are

A) private costs plus any external costs.

B) the costs of the externality only.

C) costs incurred when common property is used.

D) the costs associated with reaching and enforcing
agreements.

15) A social cost that is not fully paid by the individual
using an automobile is

A) traffic congestion.

B) gasoline and oil.

C) insurance.

D) depreciation of the vehicle.

16) When the social costs exceed the private costs, economists
state that there is

A) a positive externality.

B) an underproduction of output.

C) a negative externality.

D) social appreciation of resources.

17) When social and private costs differ, economists state
that

A) there will be economic profit in the society.

B) the society will produce inside the production
possibilities frontier.

C) there is an externality.

D) there is not an efficiency problem but an equity problem.

18) An externality that is not fully paid by the individual
using an automobile is

A) insurance for the vehicle.

B) gasoline for the vehicle.

C) air pollution from the vehicle.

D) operation of the vehicle.

19) If social cost exceeds private cost, there is

A) underproduction of a good.

B) a negative externality.

C) a positive externality.

D) too little economic profit in the activity.

20) Where pollution is concerned, if an automobile driver
considers only the internal costs of his

actions, he is apt to

A) use resources very carefully and in small quantities.

B) garage his car and drive very seldom.

C) be making a positive contribution to the greater
community.

D) drive too much and use up more scarce resources than he
would if he had to cover all his

costs.

21) If a person does not pay all costs associated with a
particular resource-using activity, then

A) the external costs of the activity are greater than the
private costs of the activity.

B) the social costs of the activity are greater than the
private costs of the activity.

C) the external costs of the activity are greater than the
internal costs of the activity.

D) the full costs of the activity are the sum of private
costs plus internal costs.

22) If the social costs of refining oil are greater than the
private costs of oil refining, then

A) the external costs of oil refining are greater than the
social costs of oil refining.

B) users of products that use refined oil are paying too
much for the products.

C) there is too much oil refining.

D) the amount of oil refining needs to increase in order to
bring social costs and private costs in

line with each other.

23) When a person does not have to pay the full costs for
using a scarce resource, then

A) the use of the resource is not affected since society
pays for the resource.

B) more of the resource will be used.

C) the internal costs of using the resource are too high.

D) the social costs of the resource are less than they would
be if the “correct” amount of the

resource were being used.

.

24) Suppose there are two factories on a river, and both
need clean water for their production

processes. The upstream factory takes in clean water and
dumps dirty water back into the river.

The downstream firm must clean up the water it gets from the
river before using it. In this

situation,

A) the private costs of the downstream factory are more than
the private costs of the upstream

factory, but for both factories private costs and social
costs are the same.

B) the social costs are greater than the private costs for
the upstream firm, while the social costs

are less than the private costs for the downstream firm.

C) the upstream factory’s private costs are less than its
social costs, and its external costs are

borne by the downstream factory.

D) the internal costs of the upstream factory are
externalized by the downstream factory, which

then passes them on to its customers.

25) When a person does not have to pay the full costs for
using a scarce resource, then there is

A) an underproduction of a good.

B) a negative externality.

C) a positive externality.

D) too little economic profit in the activity.

26) When social costs for using a scarce resource are
included, then there is

A) a decrease in the production of the good.

B) a negative externality.

C) a decrease in the price of the good.

D) a positive externality.

27) When both internal and external costs for using a scarce
resource are included, then there is

A) an increase in the production of the good.

B) a negative externality.

C) an increase in the price of the good.

D) a positive externality.

28) Which of the following is an example of an external
cost?

A) The cost of labor to a firm

B) The pollution caused by automobile exhaust

C) The cost of tires for your car

D) The opportunity cost of getting a college education

29) If coal-burning electrical utility companies fully
internalized pollution costs, then we could

expect

A) an increase in electricity prices.

B) a decrease in electricity prices.

C) no change in electricity prices.

D) a greater use of coal to produce electricity.

30) Externalities exist because

A) private costs differ from social costs.

B) private costs are equal to social costs.

C) government has created them.

D) they are a function of socialism.

31) If the external costs of production are not taken into
account, then production will

A) be less than socially desirable.

B) be more than socially desirable.

C) be the same since only prices are affected by
externalities.

D) cease.

.

32) If crop dusting on your farm causes your neighbors to
have sore throats, then crop dusting is

creating

A) only explicit costs.

B) opportunity costs.

C) external costs.

D) internal costs.

33) If firms were forced to take into account the full
social costs of production, then

A) output would decrease but pollution levels would probably
remain at the same levels.

B) output would be unaffected but pollution levels would
come down.

C) output and pollution levels would decrease.

D) output could be increased and pollution levels would
decrease.

34) If the market price of a good does NOT include all of
the costs and benefits that arise from

the production or consumption of the good, then

A) the market is perfectly competitive.

B) an externality is present.

C) society is consuming and producing the optimal amount of
the good.

D) resources are properly allocated.

35) In economic analysis, air pollution, water pollution,
and scenery destruction are considered

to be

A) externalities.

B) internalities.

C) private costs.

D) marginal benefits.

36) If a good is produced by firms that generate external
costs, the price consumers pay

A) will be efficient as long as it equals the marginal costs
of the firms.

B) will be too low.

C) will be too high because the consumers end up paying the
costs instead of the firm.

D) will be the correct price, but the quantity sold of the
good will be too large.

37) If a good is produced by firms that incur all private
and external costs, the price consumers

pay

A) will be efficient since it includes all social costs.

B) will be too low.

C) will be too high because the consumers end up paying all
of the costs instead of the firm.

D) will be the correct price, but inefficient.

38) The Black Ash Steel Company’s plant belches large
quantities of noxious fumes and black

ash into the air. Residents in the surrounding area have
higher medical bills because of Black

Ash’s pollution. These additional medical costs represent

A) a positive externality.

B) a negative externality.

C) the company’s private costs.

D) the neighboring families’ external costs.

39) The Black Ash Steel Company’s plant belches large
quantities of noxious fumes and black

ash into the air. Residents in the surrounding area have
higher medical bills because of Black

Ash’s pollution. As long as Black Ash is allowed to emit
pollution and ignore any externalities,

the firm will

A) overproduce.

B) under produce.

C) charge too high a price for its output.

D) be absorbing the full value of its social costs.

40) The Black Ash Steel Company’s plant belches large
quantities of noxious fumes and black

ash into the air. Residents in the surrounding area have
higher medical bills because of Black

Ash’s pollution. If the firm is forced to pay the social
costs of its production,

A) the amount of steel it produces will increase in order to
pay the additional costs.

B) the price it charges for its steel will decrease.

C) its supply curve will shift to the right.

D) it will produce less and charge more for its steel.

41) Refer to the above figure. It represents supply and
demand for The Black Ash Steel

Company’s output. The firm’s plant belches large quantities
of smelly fumes and black ash into

the air. Residents in the surrounding area have higher
medical bills as a result. If the firm is

forced to pay the full social cost of its production, what
will occur?

A) Black Ash’s supply curve will shift from SA to SB.

B) Demand for the firm’s steel will shift to the left.

C) The company’s supply curve will shift from SB to SA.

D) Black Ash will increase its own output to cover the cost
increase.

42) Private costs are

A) external costs borne by private firms.

B) explicit costs rather than implicit costs.

C) costs borne by private members of society rather than
governmental bodies.

D) costs borne solely by the individuals who incur them.

Question_Doc14_15Dec_8th


Attachments
Question_Doc14_15Dec_8th_-_Answer.docx (17.44 KB)

Preview: are xxxxxx property, xx property without xxxxxxxx rights 21) xxx are xxxx xxxxxxxxxx species xxxxxx to common xxxxxxxxxxxxxxxx In contrast xx private xxxxxxxxx xxxx endangered xxxxxxx are common xxxxxxxx to which xx one xxx x property xxxxx and thus xxx no vested xxxxxxxx in xxxxxxxx xxxx their xxxxxxxxxxx survive over xxxx 1) Which xx the xxxxxxxxx xxxxxxxxxx best xxxxxxx private costs?A) xxxx are internal xx the xxxxx xxxx the xxxx or household xxxx explicitly take xxxx into xxxxxxx xx They xxx costs borne xx people other xxxx those xxx xxxxxx the xxxxxx C) They xxx synonymous with xxxxxx costs xx xxxx represent xxxxxxxx costs incurred xx business firms xx the xxxxxxx xxxxxx Answer: xxx Costs that xxx borne solely xx the xxxxxxxxxxx xxx incur xxxx are calledA) xxxxxxx costs B) xxxxxx costs xx xxxxxx costs xx external costs xxxxxxx A3) When xxx costs xx xx action xxx not fully xxxxx by the xxx parties xxxxxxx xx a xxxxxxxxxxxx this is xxxxxx a(n)A) externality xx equilibrium xx xxxxxxxx right xx internal cost xxxxxxx A4) Pollution xxxxxxx by xxxx xxxxxxx fumes xx an example xx a situation xx whichA) xxxxxx xxxxx are xxxxxxx than private xxxxx B) social xxxxx are xxxx xxxx private xxxxx C) social xxxxx are equal xx private xxxxx xx social xxxxx are approaching xxx shutdown point xxxxxxx A5) xx xxxxxxxxxx who xxxx for personal xxxx repair has xxxxxxxx aA) xxxxxx xxxx B) xxxxxxx cost C) xxxxxxxx externality D) xxxxxxxx externality xxxxxxx xxx Private xxxxx are the xxxx asA) implicit xxxxx B) xxxxxxxx xxxxx C) xxxxxx costs D) xxxxxxxx costs Answer: xxx All xx xxx following xxx private costs xx operating an xxxxxxxxxx EXCEPTA) xxxxxxxx xxx the xxx B) depreciation xx the vehicle xx car xxxxxxxxx xx harm xx the environment xxxx emissions Answer: xxx Internal xxxxx xxxxx costs xxxxx solely by xxx individuals who xxxxx them xx xxxxx borne xx people in xxx same society xx those xxx xxxxx them xx costs borne xx people working xx the xxxx xxxx incurs xxxx D) all xxxxx incurred in xxx marketplace xxxxxxx xxx To xxxx the social xxxx of an xxxxxxx add xxxxxxxxxx xxx external xxx accounting costs xx the private xxxxx and xxx xxxxxxxx costs xx the external xxxxx and the xxxxxxxx costs xx xxx internal xxxxx and the xxxxxxx opportunity costs xxx Society xxxx xxx the xxxx opportunity cost xx any activityA) xxxx uses xxxxxx xxxxxxxxx B) xxxx causes costs xx rise C) xxxx increases xxxxxxxx xx none xx the above xxxxxxx A11) Social xxxxx areA) xxxxx xxxxx by xxxxxxx whenever a xxxxxxxxxxxxxx action takes xxxxx B) xxxxx xxxxxxxx by xxxxxxxxxx and borne xx all taxpayers xx costs xxxxxxxx xx governmental xxxxxxx programs D) xxxxxxxx costs minus xxxxxxxx costs xxxxxxx xxxx The xxxxx social cost xx production is xxxxx toA) xxxxxxxx xxxx minus xxxxxxxx cost B) xxxxxxxx cost minus xxxxxxxx cost xx xxxxxxxx cost xxxx internal cost xx internal cost xxxx opportunity xxxx xxxxxxx C13) xxxxx is “too xxxxx steel production xx theA) xxxxxx xxxxx of xxxxx production are xxxxxxxxxxxxx lower than xxx private xxxxx xx social xxxxxxxx of steel xxxxxxxxxx are declining xx social xxxxx xx steel xxxxxxxxxx are significantly xxxxxx than the xxxxxxx costs xx xxxxxx costs xx steel production xxx declining Answer: xxxx Social xxxxx xxxxx private xxxxx plus any xxxxxxxx costs B) xxx costs xx xxx externality xxxx C) costs xxxxxxxx when common xxxxxxxx is xxxx xx the xxxxx associated with xxxxxxxx and enforcing xxxxxxxxxx Answer: xxxx x social xxxx that is xxx fully paid xx the xxxxxxxxxx xxxxx an xxxxxxxxxx isA) traffic xxxxxxxxxx B) gasoline xxx oil xx xxxxxxxxx D) xxxxxxxxxxxx of the xxxxxxx Answer: A16)