Econ-528 Final Exam Questions With
Correct Answers
Mr. |Leghorn |lives |next |door |to |Mr. |Fudd. |During |hunting |season, |Mr. |Fudd |likes |to |shoot |
rabbits |in |his |backyard, |which |activity |he |values |at |$900. |The |noise |from |the |shooting |disturbs
|Mr. |Leghorn |and |prevents |him |from |taking |afternoon |naps, |which |he |values |at |$500. |If |Mr. |
Leghorn |has |the |legal |right |to |stop |Mr. |Fudd |from |hunting, |the |socially |optimal |outcome |is |for:
Select |one:
a. |Mr. |Fudd |to |pay |Mr. |Leghorn |less |than |$500 |to |continue |hunting
b. |Mr. |Fudd |to |pay |Mr. |Leghorn |between |$500 |and |$900 |to |continue |hunting |
c. |Mr. |Fudd |to |stop |hunting
d. |Mr. |Leghorn |to |pay |$500 |or |less |to |get |Mr. |Fudd |to |stop |hunting |- |CORRECT |ANSWER✔✔-b.
|Mr. |Fudd |to |pay |Mr. |Leghorn |between |$500 |and |$900 |to |continue |hunting
Which |of |the |following |statements |is |(are) |TRUE?
I.
Public |goods |tend |to |be |underprovided.
II.
One |person's |consumption |of |a |public |good |diminishes |its |use |to |another |person.
,III.
The |marginal |cost |of |providing |a |public |good |to |another |consumer |is |infinite.
Select |one:
a. |I |and |III
b. |II |and |III
c. |I, |II, |and |III
d. |I |- |CORRECT |ANSWER✔✔-d. |I
Which |of |the |following |is |a |source |of |market |failure?
Select |one:
a. |incomplete |property |rights |or |inability |to |enforce |property |rights |
b. |unforeseen |circumstances |which |leads |to |the |bankruptcy |of |many |firms
c. |a |lack |of |government |intervention |in |a |market
d. |an |inequitable |income |distribution |- |CORRECT |ANSWER✔✔-a. |incomplete |property |rights |or
|inability |to |enforce |property |rights
Which |of |the |following |activities |create |a |negative |externality?
Select |one:
a. |keeping |a |junked |car |parked |on |your |front |lawn |
b. |cleaning |up |the |sidewalk |on |your |block
c. |repainting |the |house |you |live |in |to |improve |its |appearance
, d. |graduating |from |college |- |CORRECT |ANSWER✔✔-a. |keeping |a |junked |car |parked |on |your |
front |lawn
In |the |city |of |Alvarez, |with |the |exception |of |guide |dogs |for |blind |people, |all |dogs |are |banned |
from |its |three |public |parks, |regardless |of |whether |the |animals |are |leashed. |Many |residents |are
|pushing |for |a |change |in |policy. |Canine |lover |Sara |Northridge |observed, |"There |are |800 |or |
more |homes |here. |There |are |three |parks |within |10 |minutes, |and |almost |everyone |has |a |dog, |
but |we |can't |take |our |dogs |there." |Others |fear |that |allowing |dogs |would |detract |from |their |
enjoyment |of |the |parks. |Tim |Cortis |retorted, |"We're |not |preventing |dog |lovers |from |enjoying |
the |park, |just |come |without |your |dog." |Which |of |the |following |is |a |way |of |dealing |with |the |
problem |by |assigning |property |rights |to |a |particular |group?
Select |one:
a. |dedicate |some |parks, |or |at |least |one |park, |exclusively |for |the |use |of |visitors |bringing |dogs |
to |the |park |
b. |impose |a |two-tier |entry |fee |system |- |a |lower |fee |for |non |dog |owners |and |a |higher |fee |for |
dog |owners
c. |- |CORRECT |ANSWER✔✔-a. |dedicate |some |parks, |or |at |least |one |park, |exclusively |for |the |use
|of |visitors |bringing |dogs |to |the |park
Which |of |the |following |criteria |should |be |used |to |evaluate |if |government |intervention |in |a |
market |for |the |purpose |of |environmental |protection |is |justified?
Select |one:
a. |Is |the |intervention |program |economically |efficient? |
b. |Is |the |damage |to |the |environment |from |government |intervention |as |small |as |possible?
c. |Does |the |intervention |program |make |the |amount |of |economic |surplus |as |large |as |possible?
d. |Does |the |intervention |program |reduce |pollution |to |zero |using |the |least |costly |method? |- |
CORRECT |ANSWER✔✔-a. |Is |the |intervention |program |economically |efficient?
Correct Answers
Mr. |Leghorn |lives |next |door |to |Mr. |Fudd. |During |hunting |season, |Mr. |Fudd |likes |to |shoot |
rabbits |in |his |backyard, |which |activity |he |values |at |$900. |The |noise |from |the |shooting |disturbs
|Mr. |Leghorn |and |prevents |him |from |taking |afternoon |naps, |which |he |values |at |$500. |If |Mr. |
Leghorn |has |the |legal |right |to |stop |Mr. |Fudd |from |hunting, |the |socially |optimal |outcome |is |for:
Select |one:
a. |Mr. |Fudd |to |pay |Mr. |Leghorn |less |than |$500 |to |continue |hunting
b. |Mr. |Fudd |to |pay |Mr. |Leghorn |between |$500 |and |$900 |to |continue |hunting |
c. |Mr. |Fudd |to |stop |hunting
d. |Mr. |Leghorn |to |pay |$500 |or |less |to |get |Mr. |Fudd |to |stop |hunting |- |CORRECT |ANSWER✔✔-b.
|Mr. |Fudd |to |pay |Mr. |Leghorn |between |$500 |and |$900 |to |continue |hunting
Which |of |the |following |statements |is |(are) |TRUE?
I.
Public |goods |tend |to |be |underprovided.
II.
One |person's |consumption |of |a |public |good |diminishes |its |use |to |another |person.
,III.
The |marginal |cost |of |providing |a |public |good |to |another |consumer |is |infinite.
Select |one:
a. |I |and |III
b. |II |and |III
c. |I, |II, |and |III
d. |I |- |CORRECT |ANSWER✔✔-d. |I
Which |of |the |following |is |a |source |of |market |failure?
Select |one:
a. |incomplete |property |rights |or |inability |to |enforce |property |rights |
b. |unforeseen |circumstances |which |leads |to |the |bankruptcy |of |many |firms
c. |a |lack |of |government |intervention |in |a |market
d. |an |inequitable |income |distribution |- |CORRECT |ANSWER✔✔-a. |incomplete |property |rights |or
|inability |to |enforce |property |rights
Which |of |the |following |activities |create |a |negative |externality?
Select |one:
a. |keeping |a |junked |car |parked |on |your |front |lawn |
b. |cleaning |up |the |sidewalk |on |your |block
c. |repainting |the |house |you |live |in |to |improve |its |appearance
, d. |graduating |from |college |- |CORRECT |ANSWER✔✔-a. |keeping |a |junked |car |parked |on |your |
front |lawn
In |the |city |of |Alvarez, |with |the |exception |of |guide |dogs |for |blind |people, |all |dogs |are |banned |
from |its |three |public |parks, |regardless |of |whether |the |animals |are |leashed. |Many |residents |are
|pushing |for |a |change |in |policy. |Canine |lover |Sara |Northridge |observed, |"There |are |800 |or |
more |homes |here. |There |are |three |parks |within |10 |minutes, |and |almost |everyone |has |a |dog, |
but |we |can't |take |our |dogs |there." |Others |fear |that |allowing |dogs |would |detract |from |their |
enjoyment |of |the |parks. |Tim |Cortis |retorted, |"We're |not |preventing |dog |lovers |from |enjoying |
the |park, |just |come |without |your |dog." |Which |of |the |following |is |a |way |of |dealing |with |the |
problem |by |assigning |property |rights |to |a |particular |group?
Select |one:
a. |dedicate |some |parks, |or |at |least |one |park, |exclusively |for |the |use |of |visitors |bringing |dogs |
to |the |park |
b. |impose |a |two-tier |entry |fee |system |- |a |lower |fee |for |non |dog |owners |and |a |higher |fee |for |
dog |owners
c. |- |CORRECT |ANSWER✔✔-a. |dedicate |some |parks, |or |at |least |one |park, |exclusively |for |the |use
|of |visitors |bringing |dogs |to |the |park
Which |of |the |following |criteria |should |be |used |to |evaluate |if |government |intervention |in |a |
market |for |the |purpose |of |environmental |protection |is |justified?
Select |one:
a. |Is |the |intervention |program |economically |efficient? |
b. |Is |the |damage |to |the |environment |from |government |intervention |as |small |as |possible?
c. |Does |the |intervention |program |make |the |amount |of |economic |surplus |as |large |as |possible?
d. |Does |the |intervention |program |reduce |pollution |to |zero |using |the |least |costly |method? |- |
CORRECT |ANSWER✔✔-a. |Is |the |intervention |program |economically |efficient?
