ECON 202 OLE MISS HAYES FINAL EXAM
2025/2026 WITH ACTUAL CORRECT
QUESTIONS AND VERIFIED DETAILED
ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST|BRAND NEW
VERSION!!|GUARANTEED PASS
A cost imposed on someone who is neither the consumer nor the producer is called a
a.
corrective tax.
b.
negative externality.
c.
positive externality.
d.
command and control policy.
B
Externalities tend to cause markets to be
a.
unequal.
b.
unnecessary.
c.
overwhelmed.
d.
inefficient.
D
Suppose that smoking creates a negative externality. If the government does not interfere in the
cigarette market, then
a.
the equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of
1|Page
,cigarettes smoked.
b.
the equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity
of cigarettes smoked.
c.
the equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of
cigarettes smoked.
d.
There is not enough information to answer the question.
B
With a corrective tax, the supply curve for pollution is
a.
upward-sloping.
b.
vertical.
c.
downward-sloping.
d.
horizontal.
D
According to the Coase theorem, private markets will solve externality problems and allocate
resources efficiently as long as
a.
businesses determine an appropriate level of production.
b.
private parties can bargain with sufficiently low transaction costs.
c.
the externalities that are present are positive, not negative.
d.
government assigns property rights to the harmed party.
B
Two types of private solutions to the problem of externalities are
a.
the Golden Rule and taxes.
b.
2|Page
,charities and the Golden Rule.
c.
charities and subsidies.
d.
taxes and subsidies.
B
With pollution permits, the supply curve for pollution rights is
a.
downward sloping.
b.
upward sloping.
c.
perfectly inelastic.
d.
perfectly elastic.
C
Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of
owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking.
Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is
that
a.
Jenny pays Abe $150 to give the dog to his parents who live on an isolated farm.
b.
Abe pays Jenny $350 for her inconvenience.
c.
Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm.
d.
There is no private transaction that would improve this situation.
C
Reaching an efficient bargain is difficult when the
a.
externality is negative.
b.
externality is large.
c.
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, government becomes involved.
d.
number of interested parties is large.
D
Dog owners do not bear the full cost of the noise their barking dogs create and often take too
few precautions to prevent their dogs from barking. Local governments address this problem by
a.
encouraging people to adopt cats.
b.
making it illegal to "disturb the peace."
c.
subsidizing local animal shelters.
d.
having a well-funded animal control department.
B
A cheeseburger is a
a.
common resource, because it is rival in consumption but not excludable.
b.
public good, because it is rival in consumption but not excludable.
c.
public good, because it is excludable and rival in consumption.
d.
private good, because it is excludable and rival in consumption.
D
Fire protection is a
a.
club good, because it is excludable but not rival in consumption.
b.
a public good, because it is excludable but not rival in consumption.
c.
a public good, because it is rival in consumption but not excludable.
d.
club good, because it is rival in consumption but not excludable.
A
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2025/2026 WITH ACTUAL CORRECT
QUESTIONS AND VERIFIED DETAILED
ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST|BRAND NEW
VERSION!!|GUARANTEED PASS
A cost imposed on someone who is neither the consumer nor the producer is called a
a.
corrective tax.
b.
negative externality.
c.
positive externality.
d.
command and control policy.
B
Externalities tend to cause markets to be
a.
unequal.
b.
unnecessary.
c.
overwhelmed.
d.
inefficient.
D
Suppose that smoking creates a negative externality. If the government does not interfere in the
cigarette market, then
a.
the equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of
1|Page
,cigarettes smoked.
b.
the equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity
of cigarettes smoked.
c.
the equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of
cigarettes smoked.
d.
There is not enough information to answer the question.
B
With a corrective tax, the supply curve for pollution is
a.
upward-sloping.
b.
vertical.
c.
downward-sloping.
d.
horizontal.
D
According to the Coase theorem, private markets will solve externality problems and allocate
resources efficiently as long as
a.
businesses determine an appropriate level of production.
b.
private parties can bargain with sufficiently low transaction costs.
c.
the externalities that are present are positive, not negative.
d.
government assigns property rights to the harmed party.
B
Two types of private solutions to the problem of externalities are
a.
the Golden Rule and taxes.
b.
2|Page
,charities and the Golden Rule.
c.
charities and subsidies.
d.
taxes and subsidies.
B
With pollution permits, the supply curve for pollution rights is
a.
downward sloping.
b.
upward sloping.
c.
perfectly inelastic.
d.
perfectly elastic.
C
Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of
owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking.
Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is
that
a.
Jenny pays Abe $150 to give the dog to his parents who live on an isolated farm.
b.
Abe pays Jenny $350 for her inconvenience.
c.
Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm.
d.
There is no private transaction that would improve this situation.
C
Reaching an efficient bargain is difficult when the
a.
externality is negative.
b.
externality is large.
c.
3|Page
, government becomes involved.
d.
number of interested parties is large.
D
Dog owners do not bear the full cost of the noise their barking dogs create and often take too
few precautions to prevent their dogs from barking. Local governments address this problem by
a.
encouraging people to adopt cats.
b.
making it illegal to "disturb the peace."
c.
subsidizing local animal shelters.
d.
having a well-funded animal control department.
B
A cheeseburger is a
a.
common resource, because it is rival in consumption but not excludable.
b.
public good, because it is rival in consumption but not excludable.
c.
public good, because it is excludable and rival in consumption.
d.
private good, because it is excludable and rival in consumption.
D
Fire protection is a
a.
club good, because it is excludable but not rival in consumption.
b.
a public good, because it is excludable but not rival in consumption.
c.
a public good, because it is rival in consumption but not excludable.
d.
club good, because it is rival in consumption but not excludable.
A
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