EC248 MIDTERM 1 2024|Questions
Solved 100% Correct
The following is NOT true when private benefits differ from social benefits
A. price cannot be determined
B. an externality exists
C. resources will be allocated inefficiently
D. market production will not be socially optimal - ✔A. price cannot be determined
Perfect competition does not rule out
A. externalities
B. market power
C. market failure
D. limited information - ✔D. limited information
Asymmetry of information occurs when
A. buyers and sellers are not fully informed
B. it is costly to gather information
C. buyers and sellers have the same information
D. sellers have more information than buyers - ✔D. sellers have more information than
buyers
Monopsony refers to
A. a single supplier in the market
B. a single buyer in the market
C. a barrier to entry to the market
D. an important policy tool - ✔B. a single buyer in the market
I assume that you will received 10 utils from your first ice cream cone, 7 utils from the
second, and 3 utils from the third. I am following the assumption of A. positive
marginal utility
B. decreasing utility
C. diminishing marginal utility
D. non-satiation - ✔C. diminishing marginal utility
The economic model of consumer choice does not take into
account A. individual preferences
, B. individual goals
C. societal goals
D. constraints faced - ✔C. societal goals
Which statement is NOT true about barriers to entry in a market?
A. may occur naturally
B. may arise artificially
C. may be due to large fixed costs
D. will lead to a monopoly - ✔D. will lead to a monopoly
Market power implies
A. a well functioning market.
B. only market forces set prices.
C. an ability to influence market price.
D. perfect competition. - ✔C. an ability to influence market price.
A shadow price
A. is the value of the next best opportunity
B. is always equal to the market price
C. approximates the true average cost
D. approximates true marginal cost - ✔D. approximates true marginal cost
_________ is NOT a possible outcome of an economic evaluation
A. Incremental Cost-Effectiveness Ratio
B. Incremental Cost-Utility Ratio
C. Net Monetary Benefit
D. Least Cost Alternative - ✔D. Least Cost Alternative
The similarity between Cost-Benefit Analysis, Cost-Effectiveness Analysis and Cost-
Utility Analysis is
A. how the consequences are valued
B. how the consequences are measured
C. how costs are measured
D. how the results are reported - ✔C. how costs are measured
The social optimum occurs when:
A. total benefits have been maximized.
B. total benefits have been minimized.
C. total costs equal total benefits.
D. marginal costs equal marginal benefits. - ✔D. marginal costs equal
marginal benefits.
The human-capital approach may be used in
A. Cost-Benefit Analysis
B. Cost-Effectiveness Analysis
Solved 100% Correct
The following is NOT true when private benefits differ from social benefits
A. price cannot be determined
B. an externality exists
C. resources will be allocated inefficiently
D. market production will not be socially optimal - ✔A. price cannot be determined
Perfect competition does not rule out
A. externalities
B. market power
C. market failure
D. limited information - ✔D. limited information
Asymmetry of information occurs when
A. buyers and sellers are not fully informed
B. it is costly to gather information
C. buyers and sellers have the same information
D. sellers have more information than buyers - ✔D. sellers have more information than
buyers
Monopsony refers to
A. a single supplier in the market
B. a single buyer in the market
C. a barrier to entry to the market
D. an important policy tool - ✔B. a single buyer in the market
I assume that you will received 10 utils from your first ice cream cone, 7 utils from the
second, and 3 utils from the third. I am following the assumption of A. positive
marginal utility
B. decreasing utility
C. diminishing marginal utility
D. non-satiation - ✔C. diminishing marginal utility
The economic model of consumer choice does not take into
account A. individual preferences
, B. individual goals
C. societal goals
D. constraints faced - ✔C. societal goals
Which statement is NOT true about barriers to entry in a market?
A. may occur naturally
B. may arise artificially
C. may be due to large fixed costs
D. will lead to a monopoly - ✔D. will lead to a monopoly
Market power implies
A. a well functioning market.
B. only market forces set prices.
C. an ability to influence market price.
D. perfect competition. - ✔C. an ability to influence market price.
A shadow price
A. is the value of the next best opportunity
B. is always equal to the market price
C. approximates the true average cost
D. approximates true marginal cost - ✔D. approximates true marginal cost
_________ is NOT a possible outcome of an economic evaluation
A. Incremental Cost-Effectiveness Ratio
B. Incremental Cost-Utility Ratio
C. Net Monetary Benefit
D. Least Cost Alternative - ✔D. Least Cost Alternative
The similarity between Cost-Benefit Analysis, Cost-Effectiveness Analysis and Cost-
Utility Analysis is
A. how the consequences are valued
B. how the consequences are measured
C. how costs are measured
D. how the results are reported - ✔C. how costs are measured
The social optimum occurs when:
A. total benefits have been maximized.
B. total benefits have been minimized.
C. total costs equal total benefits.
D. marginal costs equal marginal benefits. - ✔D. marginal costs equal
marginal benefits.
The human-capital approach may be used in
A. Cost-Benefit Analysis
B. Cost-Effectiveness Analysis
