NSC EXAM 3 QUESTIONS AND
ANSWERS WITH COMPLETE
SOLUTIONS 100% CORRECT RATED
A+ ||NEWLY UPDATED 2026/2027
People engage in optimization, which means doing the best possible with available
resources
✔✔ True
What is an externality in a market?
✔✔ When some costs or benefits of producing a good are not reflected in the
market price
What is NOT an example of a market failure?
✔✔ Taxes
What is the law of demand?
✔✔ When the price of a good increases, the quantity demanded decreases
What is the primary disadvantage of a Pigovian tax?
✔✔ It decreases the quantity of the agricultural good being produced
In a cap-and-trade system, industry groups set standards on pollution in a particular
industrial sector, which can be bought and sold -ANSWER ✔✔False
What kind of tax is implemented to achieve specific environmental, social, or
economic goals that are hampered by externalities? -ANSWER ✔✔Pigovian Tax
, What is an example of a positive externality? -ANSWER ✔✔Ecosystem Services
of Agriculture
What term describes a market in which there are many buyers but only one seller?
-ANSWER ✔✔Monopoly
Why have corn prices risen in recent years? -ANSWER ✔✔There has been a
demand expansion for corn due to quota set by the ethanol industry.
Policy, or institutional rules, have little influence over human behavior. -ANSWER
✔✔Fasle
Appropriation Bill -ANSWER ✔✔Bills passed annually to allocate federal funds
for specific programs
Authorizing Legislation -ANSWER ✔✔Bills creating new programs or extending
or repealing old ones
Entitlement Programs -ANSWER ✔✔Provide benefits to all persons who meet
eligibility requirements
What is pre-emption? -ANSWER ✔✔Limitation by a higher level of government
on what actions can be taken by a lower level of government
What is the role of special interest groups in policy? -ANSWER ✔✔They are
groups of people who share the same interests, and work to influence the
legislative process and other aspects of policymaking.
ANSWERS WITH COMPLETE
SOLUTIONS 100% CORRECT RATED
A+ ||NEWLY UPDATED 2026/2027
People engage in optimization, which means doing the best possible with available
resources
✔✔ True
What is an externality in a market?
✔✔ When some costs or benefits of producing a good are not reflected in the
market price
What is NOT an example of a market failure?
✔✔ Taxes
What is the law of demand?
✔✔ When the price of a good increases, the quantity demanded decreases
What is the primary disadvantage of a Pigovian tax?
✔✔ It decreases the quantity of the agricultural good being produced
In a cap-and-trade system, industry groups set standards on pollution in a particular
industrial sector, which can be bought and sold -ANSWER ✔✔False
What kind of tax is implemented to achieve specific environmental, social, or
economic goals that are hampered by externalities? -ANSWER ✔✔Pigovian Tax
, What is an example of a positive externality? -ANSWER ✔✔Ecosystem Services
of Agriculture
What term describes a market in which there are many buyers but only one seller?
-ANSWER ✔✔Monopoly
Why have corn prices risen in recent years? -ANSWER ✔✔There has been a
demand expansion for corn due to quota set by the ethanol industry.
Policy, or institutional rules, have little influence over human behavior. -ANSWER
✔✔Fasle
Appropriation Bill -ANSWER ✔✔Bills passed annually to allocate federal funds
for specific programs
Authorizing Legislation -ANSWER ✔✔Bills creating new programs or extending
or repealing old ones
Entitlement Programs -ANSWER ✔✔Provide benefits to all persons who meet
eligibility requirements
What is pre-emption? -ANSWER ✔✔Limitation by a higher level of government
on what actions can be taken by a lower level of government
What is the role of special interest groups in policy? -ANSWER ✔✔They are
groups of people who share the same interests, and work to influence the
legislative process and other aspects of policymaking.
