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28 Oct 2020

15. Which of the following illustrates the concept of external cost?

a. Bad weather decreases the size of the cotton crop.

b. An increase in the demand for coke raises the price paid by consumers of pasta, thereby harming these consumers.

c. Smoking harms the health of the smoker.

d. Smoking harms the health of nearby nonsmokers.

Booster class
Microeconomics
Skill
Defining Negative Externality
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Raushan Raj
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28 Oct 2020

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Related questions

14. “Flat of the curve medicine” refers to the situation where the
a. aggregate value of health care inputs approaches zero
b. marginal value of health care inputs approaches zero
c. average value of health care inputs approaches zero
d. median value of health care inputs approaches zero
e. none of the above
15. At the monopolist’s profit maximizing level of output:
a. marginal cost is less than marginal benefit
b. marginal cost is greater than marginal benefit
c. marginal cost is less than marginal revenue
d. marginal cost is greater than marginal revenue
16. Which of the following will not lead to an increase in the price of blueberries
a. rise in agricultural wages
b. bug infestation that damages the blueberry crop
c. decrease in the price of strawberries
d. study showing that blueberries reduce the risk of stomach cancer
17. Each of the following leads to more elastic demand for a product, except:
a. plentiful substitutes
b. longer time-horizon
c. larger share of household budget
d. greater degree of necessity
18. In a regression examining the determinants of income, the estimated effect of education on income will be upward biased if education is:
a. positively correlated with an omitted variable which is uncorrelated with income
b. positively correlated with an omitted variable which is negatively correlated with income
c. positively correlated with an omitted variable which is positively correlated with income
d. uncorrelated with an omitted variable which is positively correlated with income
19. Which of the following correctly identifies an efficiency property of competitive equilibria:
a. the good is produced by the lowest cost producers
b. consumers who deserve the good the most get it
c. the good is produced up to the point where marginal benefit equals zero
d. none of the above

1 an imperfect market, individual firms

A.are always able to set the price of their product.
B.are able to influence the price of their product.
C.have no influence over the price of their product.

D.take the market price as given.

1 Which of the following is NOT characteristic of a market economy?

Significant government intervention
Little or no government intervention
Buyers and sellers motivated by self-interest
Prices determined by demand and supply

2 In a competitive market, the price of the product is

independently set by each competing seller.
set by the market leader and then copied by other sellers.
jointly set after a meeting of all sellers in the market.
set by market supply and demand.

3 Which of the following firms participates in a competitive market?

A new car manufacturer, such as Ford, Honda, Toyota, or GMC
A software producer, such as Microsoft
A corn farmer
A local electric utility company

4 In an imperfect market, individual firms

are always able to set the price of their product.
are able to influence the price of their product.
have no influence over the price of their product.
take the market price as given.

5 Which of the following firms operates as a monopoly?

A car manufacturer
A local water utility
A corn farmer
A fish vendor at a neighborhood market

6 According to the law of demand, what is the relationship between price and quantity demanded?

Direct
No relationship
Inverse

7 Refer to the following graph. The demand curve slopes downward because
Click to view graphic. (Links to an external site.)

prices and quantity demanded move in opposite directions.
prices and quantity demanded move in the same direction.
prices and quantity demanded have no relationship.
prices and quantity demanded remain unchanged.

8 A change in which of the following will cause a change in the quantity demanded of coffee?

Consumer income
The price of green tea, a substitute for coffee
The number of coffee consumers
The price of coffee

9 Suppose that burgers and fries are complements in consumption. If the price of fries increases

overall demand for burgers will increase.
overall demand for burgers will decrease.
quantity demanded for burgers will increase.
quantity demanded for burgers will decrease.

10 Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then

both the equilibrium price and the quantity of Pepsi demanded will decrease.
both the equilibrium price and the quantity of Pepsi demanded will increase.
the equilibrium price of Pepsi will increase and the quantity demanded of Pepsi will decrease.
the equilibrium price of Pepsi will decrease and the quantity demanded of Pepsi will increase.

11 According to the law of supply, what is the relationship between price and quantity supplied?

Direct
No relationship
Inverse
It depends on the change in price

12 Refer to the graph below. The supply curve is _______________ driven by the law of supply.
Click to view graphic. (Links to an external site.)

Downward sloping
Upward sloping
Perfectly vertical
Perfectly horizontal

13 A change in which of the following will cause a change in the quantity supplied of coffee?

The technology or the production process of making coffee
Anticipation of a change in the price of coffee
The wages of coffee bean pickers
The price of coffee

14 Which of the following will cause a rightward shift in the supply curve for tobacco?

A fall in the number of tobacco farmers in the market
An increase in taxes on tobacco
Removal of government subsidies to tobacco farmers
An improvement in the technology used in the production of tobacco

15 Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?

Overall supply will increase
Overall supply will decrease
Quantity supplied will increase
Quantity supplied will decrease

16 Refer to the following image. When a market is in equilibrium, which of the following is true?
Click to view graphic. (Links to an external site.)

Quantity supplied exceeds quantity demanded
Quantity supplied is less than quantity demanded
Quantity supplied is equal to quantity demanded
There is no relationship between quantity supplied and quantity demanded

17 Refer to the following figure. At a price of $15, this market is experiencing a(n)
Click to view graphic. (Links to an external site.)

equilibrium.
shortage.
surplus.
none of the above are true.

18 Refer to the following figure. At a price of $5, this market is experiencing
Click to view graphic. (Links to an external site.)

equilibrium.
a shortage.
a surplus.
None of the above are true.

19 Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the

equilibrium quantity and equilibrium price of pasta salad will increase.
equilibrium quantity of pasta salad will decrease and the equilibrium price of pasta salad may either increase or decrease.
equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.
equilibrium quantity and equilibrium price of pasta salad will both decrease.

20. What must happen to the market price in order for a shortage to be eliminated?

Price must fall.
Price must rise.
Price must stay the same.
Price may rise or fall depending on the size of the shortage.

1. With regard to health care spending patterns, we can say that
 
A. Everybody demands the same basic level of health care
B. Health care spending varies dramatically according to governments willingness to pay for such services
C. Men demand much more medical care than women
D. The elderly need much less health care than adults do
E. Only a few people (less than 5 percent) consume more than half of all health care expenditures
 
2. Which of the following is the best example of a renewable resource?
 
A. Crude petroleum
B. The ozone layer in the atmosphere
C. Library book
D. Minerals
E. Trees
 
3. All of the following are reasons for health care expenditures in the U.S. Rising EXCEPT
A. The government (FDA) restricts entry of drugs to the U.S. Marketplace
B. The demand for health care has risen
C. The federal government has had such a small role in health care
D. The supply of physicians is restricted by the American medical association
E. Health insurance is regulated on a state by state basis so someone cannot buy a less expensive policy from an insurer in another state
 
4. Free market economists argue that
 
A. Markets will not adjust to a demand shock without government intervention
B. Markets will adjust to a demand shock without government intervention
C. Central planners are best equipped to handle external shocks and get the economy back on track
D. It would take the government too long to intervene and get the economy back on track
E. Government intervention is necessary to get the economy back on track
 
5. True or false? The health care restrictions and regulations prevent the entry and exit of firms and prevent the effect of competition on prices.
 
6. True or false? In a market system, those who own the most highly valued resources have the highest incomes.
 
7. True or false? Since consumers do not have to choose whether to use their own money for health care or for something else, the role of price as an allocation mechanism does not work in health care.
 
8. Health economics is important to study for all of the following reasons EXCEPT
 
A. Spending on health care in the U.S. exceeds $2 trillion
B. The elderly are the smallest users of health care, and the young are the major users
C. Only 1% of the population account for almost 30% of total health care expenditures
D. Health care expenditures have risen from 5.9% of GDP in 1965 to over 16% of GDP today
E. None - all of these are true
 
9. An illegal drug dealer will maximize profit by providing and selling the number of drugs where
 
A. Private costs equal social costs
B. The greatest number of consumers can be derived
C. The price is maximized
D. Private property rights are best defined
E. Marginal revenue equals marginal cost

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