ECON B-251 Chapter 8 And Chapter 9
Canvas Quiz With 100% Correct
Answers 2025-2026 Update.
IU cuts enrollment for first tear students from 8,000 to 3,000 for the next 10 years in order to
become more exclusive and rise in the ranking. As a consequence, if this decision, rental prices
for apartments in Bloomington fall. This fall in rental prices is
A. A positive externality
B. A negative externality
C. A correct price signal that indicates that scarcity has increased
D. A correct price signal that indicates that scarcity has decreased - Answer D. A correct price
signal that indicates that scarcity has decreased
Which of the following does not belong?
A. Your neighbor's dog barking at 2 am and waking you up the night before a major test
B. Global climate change
C. A nuclear explosion in France with the radioactive dust carried all around the globe
D. Covid-26 spreading from one commercial center to another and from one tourist site to
another - Answer A. Your neighbor's dog barking at 2 am and waking you up the night before a
major test
Imagine that in a competitive market without any externalities, at some allocation Q1 the
marginal benefit is greater than the marginal cost of the next unit produced. This allocation is
efficient since
A. There is a large consumers' surplus
B. The price is above marginal cost
C. The profit for firms is large
D. None of the above - Answer D. None of the above
Imagine that in a competitive market without any externalities, at some allocation Q1 the
, B. There is a possibility for one consumer and one firm to make a mutually beneficial trade, but
that trade will hurt other firms
C. There is a possibility for one consumer and one firm to make a mutually beneficial trade, but
that trade will hurt other firms
D. There is the possibility for one consumer and one firm to make a mutually beneficial trade,
but that trade hurts other consumers and other firms - Answer A. There is a possibility for one
consumer and one firm to make a mutually beneficial trade that benefits that one firm and that
one consumer without hurting anyone else
In the presence of an externality efficiency requires that
A. Marginal private benefit is equal to marginal private cost
B. Marginal social benefit is equal to marginal social cost
C. Marginal social benefit is equal to marginal external cost
D. Marginal external cost is equal to marginal external benefit - Answer B. Marginal social
benefit is equal to marginal social cost
The purpose of a Pigouvian tax is to
A. Provide for fairer allocations
B. Discourage alcohol consumption
C. Encourage production
D. Discourage production - Answer D. Discourage production
The ideal Pigouvian tax is
A. Equal to the marginal external cost
B. Equal to the marginal social cost
C. Equal to the average external cost
D. Equal to the average social cost - Answer A. Equal to the marginal external cost
Imagine that the marginal external cost is 5 quid and the Pigouvian tax is 3 quid. Then we have
Canvas Quiz With 100% Correct
Answers 2025-2026 Update.
IU cuts enrollment for first tear students from 8,000 to 3,000 for the next 10 years in order to
become more exclusive and rise in the ranking. As a consequence, if this decision, rental prices
for apartments in Bloomington fall. This fall in rental prices is
A. A positive externality
B. A negative externality
C. A correct price signal that indicates that scarcity has increased
D. A correct price signal that indicates that scarcity has decreased - Answer D. A correct price
signal that indicates that scarcity has decreased
Which of the following does not belong?
A. Your neighbor's dog barking at 2 am and waking you up the night before a major test
B. Global climate change
C. A nuclear explosion in France with the radioactive dust carried all around the globe
D. Covid-26 spreading from one commercial center to another and from one tourist site to
another - Answer A. Your neighbor's dog barking at 2 am and waking you up the night before a
major test
Imagine that in a competitive market without any externalities, at some allocation Q1 the
marginal benefit is greater than the marginal cost of the next unit produced. This allocation is
efficient since
A. There is a large consumers' surplus
B. The price is above marginal cost
C. The profit for firms is large
D. None of the above - Answer D. None of the above
Imagine that in a competitive market without any externalities, at some allocation Q1 the
, B. There is a possibility for one consumer and one firm to make a mutually beneficial trade, but
that trade will hurt other firms
C. There is a possibility for one consumer and one firm to make a mutually beneficial trade, but
that trade will hurt other firms
D. There is the possibility for one consumer and one firm to make a mutually beneficial trade,
but that trade hurts other consumers and other firms - Answer A. There is a possibility for one
consumer and one firm to make a mutually beneficial trade that benefits that one firm and that
one consumer without hurting anyone else
In the presence of an externality efficiency requires that
A. Marginal private benefit is equal to marginal private cost
B. Marginal social benefit is equal to marginal social cost
C. Marginal social benefit is equal to marginal external cost
D. Marginal external cost is equal to marginal external benefit - Answer B. Marginal social
benefit is equal to marginal social cost
The purpose of a Pigouvian tax is to
A. Provide for fairer allocations
B. Discourage alcohol consumption
C. Encourage production
D. Discourage production - Answer D. Discourage production
The ideal Pigouvian tax is
A. Equal to the marginal external cost
B. Equal to the marginal social cost
C. Equal to the average external cost
D. Equal to the average social cost - Answer A. Equal to the marginal external cost
Imagine that the marginal external cost is 5 quid and the Pigouvian tax is 3 quid. Then we have
