1.
The ______is the amount by which an additional unit of activity increases its cost.
A) marginal cost
B) average cost
C) average profit
D) marginal benefit
Points Earned: / 1.0/1.0Correct Answer(s): / A
2.
The best example of a common property resource is:
A) clothing.
B) education.
C) automobiles.
D) tuna in the ocean.
Points Earned: / 1.0/1.0Correct Answer(s): / D
3.
If the marginal benefit received from a good is less than the marginal cost of production, then:
A) society's well-being can be improved if production increases.
B) society's well-being can be improved if production decreases.
C) society's well-being cannot be improved by changing production.
D) the market is producing too little of the good.
Points Earned: / 1.0/1.0Correct Answer(s): / B
4.
The total benefit of an activity minus its total cost is:
A) net benefit.
B) marginal benefit.
C) marginal cost.
D) utility.
Points Earned: / 1.0/1.0Correct Answer(s): / A
5.
The market for apples achieves an efficient allocation of resources when prices respond and send signals to producers and consumers. That set of interactions requires that producers possess:
A) lobby access to government.
B) monopoly power.
C) property rights to the apples they grow.
D) the ability to set any price they choose for their apples.
Points Earned: / 1.0/1.0Correct Answer(s): / C
6.
A good for which no exclusive property rights exist is a:
A) common property resource.
B) private good.
C) private resource.
D) social-private good.
Points Earned: / 1.0/1.0Correct Answer(s): / A
7.
When we judge the performance of the economy, we must consider:
A) efficiency.
B) external costs and external benefits.
C) equity and value judgments.
D) all of the above.
Points Earned: / 1.0/1.0Correct Answer(s): / D
8.
The amount by which an additional unit of an activity increases total benefit is:
A) net benefit.
B) marginal benefit.
C) marginal cost.
D) utility.
Points Earned: / 0.0/1.0Correct Answer(s): / B
9.
If the market produces quantity G, then:
A) marginal benefit is equal to marginal cost.
B) marginal benefit is less than marginal cost.
C) marginal benefit is greater than marginal cost.
D) price is equal to marginal cost and less than marginal benefit.
Points Earned: / 1.0/1.0Correct Answer(s): / B
10.
A transferable property right is one that:
A) can be sold or leased to someone else.
B) allows its owners to prevent others from using a resource.
C) equates marginal benefits to marginal costs.
D) lets anyone use a resource without cost to society.
Points Earned: / 1.0/1.0Correct Answer(s): / A
11.
To be effective, property rights must be:
A) exclusive and transferable.
B) free and quasi-public.
C) constrained and marginal.
D) all of the above.
Points Earned: / 1.0/1.0Correct Answer(s): / A
12.
The best example of a common property resource is:
A) the electromagnetic spectrum.
B) transportation.
C) automobiles.
D) clothing.
Points Earned: / 1.0/1.0Correct Answer(s): / A
13.
An example of a public good is:
A) a state university.
B) food.
C) fire protection.
D) the Ramada Inn.
Points Earned: / 1.0/1.0Correct Answer(s): / C
14.
If the marginal benefit received from a good is equal to the marginal cost of production, then:
A) society's well-being can be improved if production increases.
B) society's well-being can be improved if production decreases.
C) the market is producing too much of the good.
D) the market is producing an efficient quantity.
Points Earned: / 1.0/1.0Correct Answer(s): / D
1.
The supply curve in the exhibit can be considered to be a ______curve.
A) marginal benefit
B) total benefit
C) marginal cost
D) marginal benefit
Points Earned: / 1.0/1.0Correct Answer(s): / C
2.
To be effective in facilitating exchange, property rights must be:
A) nonexclusive.
B) transferable.
C) free.
D) owned by everyone.
Points Earned: / 1.0/1.0Correct Answer(s): / B
3.
An external cost would cause ______production of the good and may require a ______to internalize the externality into the market.
A) too much; tax
B) too much; subsidy
C) too little; tax
D) too little; subsidy
Points Earned: / 1.0/1.0Correct Answer(s): / A
4.
Net benefit can be maximized by equating:
A) total benefit to total cost.
B) marginal benefit to marginal cost.
C) marginal benefit to total cost.
D) total benefit to marginal cost.
Points Earned: / 1.0/1.0Correct Answer(s): / B
5.
If an activity generates external costs, the decisionmakers generating the activity will:
A) be faced with its full costs.
B) be faced with no costs.
C) not be faced with its full costs.
D) be faced with excesive costs.
Points Earned: / 1.0/1.0Correct Answer(s): / C
6.
Profit is the difference between ______and ______.
A) total sales; total revenues
B) total profits; total costs
C) total revenues; total costs
D) marginal costs; marginal revenues
Points Earned: / 1.0/1.0Correct Answer(s): / C
7.
When the market does not result in an efficient allocation of scarce resources, economists call this:
A) market dropout.
B) normative economics.
C) market disincentives.
D) market failure.
Points Earned: / 1.0/1.0Correct Answer(s): / D
8.
Maximization of the net benefit of an activity occurs when:
A) MB = MC.
B) MB > MC.
C) MB < MC.
D) MB approaches MC.
Points Earned: / 1.0/1.0Correct Answer(s): / A
9.
Common property resources tend to be ______through markets.
A) overpriced
B) efficiently priced
C) overconsumed
D) underconsumed
Points Earned: / 1.0/1.0Correct Answer(s): / C
10.
In economics the assumption is made that consumers and firms will make choices that maximize(s) the ______of each activity.
A) net benefit
B) total benefit
C) sum of total benefit and total cost
D) product of total benefit and total cost
Points Earned: / 1.0/1.0Correct Answer(s): / A
11.
A key element that a public good displays is:
A) government production.
B) government provision.
C) payment through taxes
D) nonexclusion.
Points Earned: / 1.0/1.0Correct Answer(s): / D
12.
When we judge the performance of the economy, we must consider:
A) efficiency.
B) external costs and external benefits.
C) equity and value judgments.
D) all of the above.
Points Earned: / 1.0/1.0Correct Answer(s): / D
13.
Whenever MB = MC, the decisionmaker should do ______of the activity.
A) less
B) the same amount
C) more
D) none
Points Earned: / 1.0/1.0Correct Answer(s): / B
14.
According to the marginal decision rule, if marginal benefit:
A) exceeds marginal cost, an activity should be reduced.
B) is less than marginal cost, an activity should be reduced.
C) is equal to marginal cost, an activity should be reduced.
D) exceeds marginal cost, net benefit is maximized.
Points Earned: / 1.0/1.0Correct Answer(s): / B
1.
All of the following are examples of external cost EXCEPT:
A) smoke nuisance of a factory.
B) zoning restrictions on your property.
C) land defilement from strip mining.
D) weeds on your next-door neighbor's lawn.
Points Earned: / 1.0/1.0Correct Answer(s): / B
2.
The best example of a common property resource is:
A) the electromagnetic spectrum.
B) transportation.
C) automobiles.
D) clothing.
Points Earned: / 1.0/1.0Correct Answer(s): / A
3.
If the market produces quantity G, then:
A) marginal benefit is equal to marginal cost.
B) marginal benefit is less than marginal cost.
C) marginal benefit is greater than marginal cost.
D) price is equal to marginal cost and less than marginal benefit.
Points Earned: / 1.0/1.0Correct Answer(s): / B
4.
When the net benefits of all economic activities are maximized, economists say the allocation of resources is ______.
A) inefficient
B) correct
C) efficient
D) well done
Points Earned: / 1.0/1.0Correct Answer(s): / C
5.
Whenever MB = MC, the decisionmaker should do ______of the activity.
A) less
B) the same amount
C) more
D) none
Points Earned: / 1.0/1.0Correct Answer(s): / B
6.
An ______results from any action that imposes costs on others outside of any market exchange.
A) internal cost
B) outside cost
C) external cost
D) endogenous cost
Points Earned: / 1.0/1.0Correct Answer(s): / C
7.
Property rights are defined as a set of rules that:
A) specify how consumers buy a product.
B) allows owners to use their property any way they choose.
C) determine the value of property.
D) specify the ways in which an owner can use a resource.
Points Earned: / 1.0/1.0Correct Answer(s): / D
8.
When public goods are provided by private firms, with no government involvement, we expect that:
A) the equilibrium quantity will be less than would be efficient.
B) the equilibrium quantity will be greater than would be efficient.
C) the equilibrium quantity will be the efficient quantity.
D) their profits will be excessive.
Points Earned: / 1.0/1.0Correct Answer(s): / A
9.
In order to maximize net benefit, consumers and firms evaluate each activity at the:
A) average.
B) top.
C) margin.
D) end.
Points Earned: / 1.0/1.0Correct Answer(s): / C
10.
Common property resources tend to be ______through markets.
A) overpriced
B) efficiently priced
C) overconsumed
D) underconsumed
Points Earned: / 1.0/1.0Correct Answer(s): / C
11.
The amount by which an additional unit of an activity increases total benefit is:
A) net benefit.
B) marginal benefit.
C) marginal cost.
D) utility.
Points Earned: / 1.0/1.0Correct Answer(s): / B
12.
In the production of peanut butter, if Peanuts 'R' Us, Inc. discards broken peanut shells onto an adjacent recreational area, this situation will most likely lead to the market failure of:
A) external cost.
B) deregulation.
C) monopoly power.
D) imperfect information.
Points Earned: / 1.0/1.0Correct Answer(s): / A
13.
Profit is the:
A) difference between a firm's total revenue and its total economic cost.
B) satisfaction consumers derive from their consumption of goods and services.
C) highest price that buyers are willing to pay for a given quantity of a good.
D) lowest price that sellers are willing to accept for a given quantity of a good.
Points Earned: / 1.0/1.0Correct Answer(s): / A
14.
An external cost would cause ______production of the good and may require a ______to internalize the externality into the market.
A) too much; tax
B) too much; subsidy
C) too little; tax
D) too little; subsidy
Points Earned: / 1.0/1.0Correct Answer(s): / A