Econ 2100 Exam #2 with complete
verified solutions
Because there are positive externalities from high education,
a. private markets will under-supply college classes
b. price markets will over-supply college students
c. the government intervention cannot improve the market for college
classes - answer a.
Which of the following statements is not correct?
a. a patent is a way for the government to encourage the production of a
good with technology spillovers.
b. a tax is a way for the government to reduce the production of a good with
a negative externality.
c. a tax that accurately reflects social costs produces the socially optimal
outcome
d. government policies cannot improve upon private market outcomes. -
answer d.
The world price of a ton of steel is $1000. Before Russia allowed trade in
steel, the price of a ton of steel there was $650. Once Russia allowed trade in
steel with other countries, Russia began
a. exporting steel and the price per ton in Russian remained at $650
b. exporting steel and the price per ton increased to $1000.
c. importing steel and the price per ton in Russia remained at $650
d. importing steel and the price per ton in Russia increased to $1000. -
answer b.
When Lisa drives to work every morning, she drives on a congested highway.
What Lisa does not realize is that when she enters the highway each morning
, she increases the travel time of all other drivers on the highway. In this case,
the external cost of Lias's highway trip
a. increases the social cost above the private cost.
b. lower the social cost below the private cost
c. increases the social value above the private benefit
d. decreases the social value below the private benefit - answer a.
Honey producers provide a positive externality to orchards because
a. the honey producers get more honey.
b. the orchard owner frequently gets stung by the honey producer's bees
c. the orchard owner does not have to purchase bees to pollinate his flowers
d. the honey producers have to rent access to the orchard grounds - answer
c
The General Agreement on Tariffs and Trade (GATT) was initiated in response
to
a. an increase in exports of low-priced goods from developing countries to
developed countries.
b. the replacement of manufacturing jobs with service jobs in developed
countries
c. economic dislocations caused by the North American Free Trade
Agreement (NAFTA) in the 1990's.
d. high tariffs imposed during the Great Depression in the 1930s. - answer d.
A negative externality
a. is an adverse impact on a bystander
b. causes the product in a market to be under-produced
c. is an adverse impact on market participants.
d. is present in markets where the good or service does not have any impact
on bystanders - answer a.
verified solutions
Because there are positive externalities from high education,
a. private markets will under-supply college classes
b. price markets will over-supply college students
c. the government intervention cannot improve the market for college
classes - answer a.
Which of the following statements is not correct?
a. a patent is a way for the government to encourage the production of a
good with technology spillovers.
b. a tax is a way for the government to reduce the production of a good with
a negative externality.
c. a tax that accurately reflects social costs produces the socially optimal
outcome
d. government policies cannot improve upon private market outcomes. -
answer d.
The world price of a ton of steel is $1000. Before Russia allowed trade in
steel, the price of a ton of steel there was $650. Once Russia allowed trade in
steel with other countries, Russia began
a. exporting steel and the price per ton in Russian remained at $650
b. exporting steel and the price per ton increased to $1000.
c. importing steel and the price per ton in Russia remained at $650
d. importing steel and the price per ton in Russia increased to $1000. -
answer b.
When Lisa drives to work every morning, she drives on a congested highway.
What Lisa does not realize is that when she enters the highway each morning
, she increases the travel time of all other drivers on the highway. In this case,
the external cost of Lias's highway trip
a. increases the social cost above the private cost.
b. lower the social cost below the private cost
c. increases the social value above the private benefit
d. decreases the social value below the private benefit - answer a.
Honey producers provide a positive externality to orchards because
a. the honey producers get more honey.
b. the orchard owner frequently gets stung by the honey producer's bees
c. the orchard owner does not have to purchase bees to pollinate his flowers
d. the honey producers have to rent access to the orchard grounds - answer
c
The General Agreement on Tariffs and Trade (GATT) was initiated in response
to
a. an increase in exports of low-priced goods from developing countries to
developed countries.
b. the replacement of manufacturing jobs with service jobs in developed
countries
c. economic dislocations caused by the North American Free Trade
Agreement (NAFTA) in the 1990's.
d. high tariffs imposed during the Great Depression in the 1930s. - answer d.
A negative externality
a. is an adverse impact on a bystander
b. causes the product in a market to be under-produced
c. is an adverse impact on market participants.
d. is present in markets where the good or service does not have any impact
on bystanders - answer a.
