Indiana University-Bloomington Econb B251 Exam 2
MOST RECENT EXAM 2026|2027 ACTUAL COMPLETE
REAL EXAM QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS (VERIFIED ANSWERS) ALREADY
GRADED A+ | GUARANTEED SUCEESS!! NEWEST EXAM
| JUST RELEASED!!
Marketable permits
A government license rationing the use of a good, service, or
resource.
The Coase Theorem
the proposition that if property rights exist, if only a small number of
parties are involved, and if transactions costs are low, then private
transactions are efficient, and it doesn't matter who has the property
rights
transaction Costs
Costs associated with any market transaction between buyers and
sellers.
,positive externalities
Benefit affecting a third party who did not choose to incur that
benefit.
marginal private benefit (MB)
The additional benefit from producing or consuming one more unit
of a good or service
Marginal external benefit
The additional benefit to someone other than the buyer or seller for
producing or consuming one more unit of a good or service
Marginal Social Benefit
The additional benefit to society for producing or consuming one
more unit of a good or service
MSB=
MB + Marginal external benefit
what are 4 devices the government can use to achieve a more
efficient allocation of resources in the presence of external benefits
-Public provisions
-private subsidies
-Vouchers
-Patents and copyright
, Rival Goods
A good consumed by one person prevents the consumption of that
same good by another.
Excludable goods
Preventing someone who has not paid for a good from consuming
it.
free ride
People who benefit from a good but do not pay for it.
Nonrival
-one person's use of it does not decrease the quantity available for
someone else
-Ex: Watching netflix
nonexcludable good
-if everyone benefits from it regardless of whether they pay for it
-Ex: Fire Work Show, Fire Department
Public goods are
non-excludable and non-rival
Private Goods are
rival and excludable
MOST RECENT EXAM 2026|2027 ACTUAL COMPLETE
REAL EXAM QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS (VERIFIED ANSWERS) ALREADY
GRADED A+ | GUARANTEED SUCEESS!! NEWEST EXAM
| JUST RELEASED!!
Marketable permits
A government license rationing the use of a good, service, or
resource.
The Coase Theorem
the proposition that if property rights exist, if only a small number of
parties are involved, and if transactions costs are low, then private
transactions are efficient, and it doesn't matter who has the property
rights
transaction Costs
Costs associated with any market transaction between buyers and
sellers.
,positive externalities
Benefit affecting a third party who did not choose to incur that
benefit.
marginal private benefit (MB)
The additional benefit from producing or consuming one more unit
of a good or service
Marginal external benefit
The additional benefit to someone other than the buyer or seller for
producing or consuming one more unit of a good or service
Marginal Social Benefit
The additional benefit to society for producing or consuming one
more unit of a good or service
MSB=
MB + Marginal external benefit
what are 4 devices the government can use to achieve a more
efficient allocation of resources in the presence of external benefits
-Public provisions
-private subsidies
-Vouchers
-Patents and copyright
, Rival Goods
A good consumed by one person prevents the consumption of that
same good by another.
Excludable goods
Preventing someone who has not paid for a good from consuming
it.
free ride
People who benefit from a good but do not pay for it.
Nonrival
-one person's use of it does not decrease the quantity available for
someone else
-Ex: Watching netflix
nonexcludable good
-if everyone benefits from it regardless of whether they pay for it
-Ex: Fire Work Show, Fire Department
Public goods are
non-excludable and non-rival
Private Goods are
rival and excludable
