Econ 200 Exam 2 Review Exam Practice Questions and
Answers |Fall 2026/2027 Update | 100% Correct
Question 1
Generally speaking, the government is better at providing public goods than the market is because public goods are:
A. excludable and rival
B. non-excludable and non-rival
C. rival and non-excludable
D. non-rival and excludable
Correct Answer
B
Question 2
London and Stockholm each use congestion charges to discourage driving. Which city has the best system and why?
A) London because they established a flat-price congestion charge.
B) London because they established a dynamic-price congestion charge.
C) Stockholm because they established a flat-price congestion charge.
D) Stockholm because they established a dynamic-price congestion charge.
Correct Answer
D
Page 1 of 40
,Question 3
Which concept is most closely associated with the underproduction of goods?
A) Common property
B) Free-riding
C) Diminishing marginal utility
D) Positive externalities
Correct Answer
D
Question 4
A roofing company decides to fix the leaky roof during your scheduled class. The noise impairs the ability of you and the
others in class to learn the material. This is a
A) positive externality
B) negative externality
C) common resource
D) public good
Correct Answer
B
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,Question 5
How would alter your transportation decisions if you had to pay for the pollution (a social cost) that your vehicle creates?
A) You would drive more to make sure that you get the full benefit from owning and operating the car.
B) You would drive more if you were poor and less if you were wealthy.
C) You would drive less since the social cost (of pollution) would now be considered part of the private cost of driving.
D) You would drive the same amount; the social cost is minimal.
Correct Answer
C
Question 6
If government regulations force a business to take into account social costs it will
A) reduce price and cuts its pollution.
B) increase price and increase the amount of pollution.
C) reduce production and charge a higher market price.
D) increase production and charge a lower market price.
Correct Answer
C
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, Question 7
My neighbor has a large satellite dish on his roof that blocks sunlight into my house. Since I need my sun, I talk to him and
I agree to pay him $200 and he switches to basic cable and takes down the satellite dish. We reached this agreement
A) Because it was a positive externality
B) Because I used incentive-free bargaining
C) Because that's what the Coase Theorem says.
D) Because property rights here are not clearly defined.
Correct Answer
C
Question 8
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.
Correct Answer
C
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Answers |Fall 2026/2027 Update | 100% Correct
Question 1
Generally speaking, the government is better at providing public goods than the market is because public goods are:
A. excludable and rival
B. non-excludable and non-rival
C. rival and non-excludable
D. non-rival and excludable
Correct Answer
B
Question 2
London and Stockholm each use congestion charges to discourage driving. Which city has the best system and why?
A) London because they established a flat-price congestion charge.
B) London because they established a dynamic-price congestion charge.
C) Stockholm because they established a flat-price congestion charge.
D) Stockholm because they established a dynamic-price congestion charge.
Correct Answer
D
Page 1 of 40
,Question 3
Which concept is most closely associated with the underproduction of goods?
A) Common property
B) Free-riding
C) Diminishing marginal utility
D) Positive externalities
Correct Answer
D
Question 4
A roofing company decides to fix the leaky roof during your scheduled class. The noise impairs the ability of you and the
others in class to learn the material. This is a
A) positive externality
B) negative externality
C) common resource
D) public good
Correct Answer
B
Page 2 of 40
,Question 5
How would alter your transportation decisions if you had to pay for the pollution (a social cost) that your vehicle creates?
A) You would drive more to make sure that you get the full benefit from owning and operating the car.
B) You would drive more if you were poor and less if you were wealthy.
C) You would drive less since the social cost (of pollution) would now be considered part of the private cost of driving.
D) You would drive the same amount; the social cost is minimal.
Correct Answer
C
Question 6
If government regulations force a business to take into account social costs it will
A) reduce price and cuts its pollution.
B) increase price and increase the amount of pollution.
C) reduce production and charge a higher market price.
D) increase production and charge a lower market price.
Correct Answer
C
Page 3 of 40
, Question 7
My neighbor has a large satellite dish on his roof that blocks sunlight into my house. Since I need my sun, I talk to him and
I agree to pay him $200 and he switches to basic cable and takes down the satellite dish. We reached this agreement
A) Because it was a positive externality
B) Because I used incentive-free bargaining
C) Because that's what the Coase Theorem says.
D) Because property rights here are not clearly defined.
Correct Answer
C
Question 8
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.
Correct Answer
C
Page 4 of 40
