LIBERTY UNIVERSITY ECON 213 QUIZ 6 Complete Solutions (100% Correct Answer)

LIBERTY UNIVERSITY ECON 213 QUIZ 6 Complete Solutions (100% Correct Answer)

Two versions

Question 1 Refer to the accompanying figure, which shows the market for fish, to answer the questions that follow. If the government sets a quota of 300 pounds of fish caught per day, then fish will sell for __________ more per pound than the cost of catching the fish.

Question 2 The tragedy of the commons occurs because the good being produced is:

Question 3 The government has identified a situation where the production of a good is creating a negative externality. The government should enact legislation to require firms to internalize the externality:

Question 4 Which of the following characteristics best defines a public good?

Question 5 The market works efficiently in the absence of externalities if the good is:

Question 6 Visiting the public beach during summer is an example of an activity that is:

Question 7 Copyright laws exist to:

Question 8 The market overproduces common­resource goods because private decision­makers consider __________ costs but society experiences __________ costs.

Question 9 Which of the following characteristics best defines a private good?

Question 10 Your neighbor is an avid gardener who changes his flower displays four times per year and who was given the “best yard on the block” award last year. While you personally enjoy these changing flower displays, some of your neighbors have said they do not like some of the flowers your neighbor chooses to plant. For you, this is an example of:

Question 11 The ability to download music and movies from the Internet without paying is:

Question 12 Consider the following scenario when answering the questions that follow: Jones owns a factory that is dumping toxic waste into a river where Smith owns a resort. At present, Jones is not filtering the water that he dumps into the river. There is a filter he could install that would remove a significant amount of the toxic elements from the water before it is dumped in the river. Jones and Smith have each assessed the situation and come up with the following data: If property rights over the river are assigned to Jones, then:

Question 13 Refer to the accompanying figure. When a negative externality exists and the government does not intervene, which point best identifies the market equilibrium?

Question 14 It is best to reduce the level of pollution:

Question 15 To reduce the level of pollution emitted by firms in an industry, the government could use a cap­and­trade policy or a carbon tax. Which of the following is true?

Question 16 Which rule would not protect fish populations?

Question 17 The costs of a market activity paid for by an individual NOT engaged in the market activity are:

Question 18 The city decides to offer a subsidy to each homeowner’s association that plants more flowers in their common areas. In the market for flowers, this will cause the:

Question 19 Which good has well­defined property rights?

Question 20 If the government decides to adopt a carbon tax, the price of goods whose production generates carbon emissions will __________ and the quantity produced will __________.

Version 2

Question 1 Refer to the following scenario to answer the questions that follow. Five fishermen live in a village and have no other employment or income­earning possibilities besides fishing. They each own a boat that is suitable for fishing but does not have any resale value. Fish are worth $5 per pound, and the marginal cost of operating the boat is $500 per month. They all fish a river next to the village. According to the following schedule, they have determined that, when there are more of them out on the river fishing, they each catch fewer fish per month. If four boats operate, then each boat will make a profit of:

Question 2 Refer to the accompanying figure, which shows the market for fish, to answer the questions that follow. If the government sets a quota of 300 pounds of fish caught per day and issues a license that entitles the holder to catch 20 pounds of fish per day, then the value of the license is:

Question 3 If government regulation forces firms in an industry to internalize the externality, then the:

Question 4 Consider the following scenario when answering the questions that follow: Jones owns a factory that is dumping toxic waste into a river where Smith owns a resort. At present, Jones is not filtering the water that he dumps into the river. There is a filter he could install that would remove a significant amount of the toxic elements from the water before it is dumped in the river. Jones and Smith have each assessed the situation and come up with the following data: If property rights over the river are assigned to Jones, then:

Question 5 Refer to the accompanying figure, which shows the market for fish, to answer the questions that follow. If the government sets a quota of 300 pounds of fish caught per day, then fish will sell for __________ more per pound than the cost of catching the fish.

Question 6 Copyright laws exist to:

Question 7 A good that is nonrival and excludable is defined as a:

Question 8 Which of the following is the best definition of a cap­and­trade policy for pollution?

Question 9 __________ can be jointly consumed by more than one person, and nonpayers are difficult to exclude.

Question 10 Refer to the following scenario to answer the questions that follow. Five fishermen live in a village and have no other employment or income­earning possibilities besides fishing. They each own a boat that is suitable for fishing but does not have any resale value. Fish are worth $5 per pound, and the marginal cost of operating the boat is $500 per month. They all fish a river next to the village. According to the following schedule, they have determined that, when there are more of them out on the river fishing, they each catch fewer fish per month. How many fishermen will choose to operate their boats?

Question 11 For a market to work efficiently:

Question 12 A major reason why public goods are not supplied by the market is the:

Question 13 Which of the following is true?

Question 14 The ability to download music and movies from the Internet without paying is:

Question 15 Externalities exist because:

Question 16 Refer to the accompanying figure. When a negative externality exists and the government does not intervene, which point best identifies the market equilibrium?

Question 17 Refer to the accompanying figure to answer the questions that follow. At the market equilibrium, price is equal to __________ units of the good are produced.

Question 18 Two policy options for reducing emissions are cap­and­trade and the carbon tax. Which of the following is true?

Question 19 The personal decisions of consumers and firms are based on:

Question 20 Which of the following is the best example of a common­resource good?