Name: Class: Date:
ECO 110 Final Form A
Indicate the answer choice that best completes the statement or answers the question. All questions are equally
weighted.
Table 35-3
The table shows the marginal social benefit and the marginal social cost of preserving various amounts of land
in a city for a public park. Suppose that parks result in positive benefits to the community as a whole but that
the marginal private benefit that any one individual in the community gets from parks is close to 0.
1. Use Table 35-3: Externalities from Parks. At the socially optimum amount of land dedicated to the public
park, the marginal social benefit will be:
a. $100
b. $225
c. $150
d. $0
2. Use Table 35-3: Externalities from Parks. If the government wants to achieve the optimum amount of land
for the park, it could use a Pigouvian _____ of _____ per park acre.
a. subsidy; $150
b. tax; $150
c. tax; $300
d. subsidy; $450
3. Use Table 35-3: Externalities from Parks. Without government intervention, the amount of land dedicated
to the public park will be _____ acres.
a. 1
b. 0
c. 9
d. 3
Page 1
,Name: Class: Date:
ECO 110 Final Form A
4. Society would like to see oligopolies move away from the perfectly competitive outcome and towards the monopoly
outcome.
a. True
b. False
5. According to the public policy approaches to monopoly that we discussed
a. They are all flawed for various reasons and sometimes the best approach is no policy.
b. Regulating monopolies is straightforward and we can easily solve their problems though price
regulation.
c. It is always easy for government to know when to break up monopolies.
d. Public ownership is a simple solution to monopolies with no drawbacks.
6. Opportunity cost is whatever must be given up to obtain some item.
a. True
b. False
7. Evaluate the statements below for truth.
i. Oligopoly is a market structure where there are only a few sellers that offer similar or differentiated products.
ii. A key feature of oligopoly is that a firm's production and pricing decisions affect other firms.
iii. Oligopoly is an example of imperfect competition.
a. Statements ii. and iii. are both correct.
b. Statements i. and ii. are both correct.
c. Only statement i. is correct.
d. All 3 of the above statements are correct.
8. A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per
st
unit. The marginal revenue of the 151 unit of output is
a. -$6.98.
b. $6.98.
c. -$0.02.
d. $2.45.
Page 2
, Name: Class: Date:
ECO 110 Final Form A
Figure 9-16.
9. Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area
a. D + F.
b. D + E + F.
c. B + D + E + F.
d. B.
10. Refer to Figure 9-16. The tariff
a. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases
total surplus by the area D + F.
b. decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases
total surplus by the area D + F.
c. increases producer surplus by the area C + G and creates government revenue represented by the area D + E +
F.
d. creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
11. Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area
a. B + E.
b. D + E + F.
c. E.
d. B + D + E + F.
12. An increase in supply is graphically shown as _____________________________________ and an increase in
quantity supplied is graphically shown as ______________________________________.
a. a shift to the right of the supply curve; a movement down and to the right along a supply
curve
b. a movement down and to the right along a supply curve; a shift to the right of the supply
curve
Page 3
ECO 110 Final Form A
Indicate the answer choice that best completes the statement or answers the question. All questions are equally
weighted.
Table 35-3
The table shows the marginal social benefit and the marginal social cost of preserving various amounts of land
in a city for a public park. Suppose that parks result in positive benefits to the community as a whole but that
the marginal private benefit that any one individual in the community gets from parks is close to 0.
1. Use Table 35-3: Externalities from Parks. At the socially optimum amount of land dedicated to the public
park, the marginal social benefit will be:
a. $100
b. $225
c. $150
d. $0
2. Use Table 35-3: Externalities from Parks. If the government wants to achieve the optimum amount of land
for the park, it could use a Pigouvian _____ of _____ per park acre.
a. subsidy; $150
b. tax; $150
c. tax; $300
d. subsidy; $450
3. Use Table 35-3: Externalities from Parks. Without government intervention, the amount of land dedicated
to the public park will be _____ acres.
a. 1
b. 0
c. 9
d. 3
Page 1
,Name: Class: Date:
ECO 110 Final Form A
4. Society would like to see oligopolies move away from the perfectly competitive outcome and towards the monopoly
outcome.
a. True
b. False
5. According to the public policy approaches to monopoly that we discussed
a. They are all flawed for various reasons and sometimes the best approach is no policy.
b. Regulating monopolies is straightforward and we can easily solve their problems though price
regulation.
c. It is always easy for government to know when to break up monopolies.
d. Public ownership is a simple solution to monopolies with no drawbacks.
6. Opportunity cost is whatever must be given up to obtain some item.
a. True
b. False
7. Evaluate the statements below for truth.
i. Oligopoly is a market structure where there are only a few sellers that offer similar or differentiated products.
ii. A key feature of oligopoly is that a firm's production and pricing decisions affect other firms.
iii. Oligopoly is an example of imperfect competition.
a. Statements ii. and iii. are both correct.
b. Statements i. and ii. are both correct.
c. Only statement i. is correct.
d. All 3 of the above statements are correct.
8. A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per
st
unit. The marginal revenue of the 151 unit of output is
a. -$6.98.
b. $6.98.
c. -$0.02.
d. $2.45.
Page 2
, Name: Class: Date:
ECO 110 Final Form A
Figure 9-16.
9. Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area
a. D + F.
b. D + E + F.
c. B + D + E + F.
d. B.
10. Refer to Figure 9-16. The tariff
a. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases
total surplus by the area D + F.
b. decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases
total surplus by the area D + F.
c. increases producer surplus by the area C + G and creates government revenue represented by the area D + E +
F.
d. creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
11. Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area
a. B + E.
b. D + E + F.
c. E.
d. B + D + E + F.
12. An increase in supply is graphically shown as _____________________________________ and an increase in
quantity supplied is graphically shown as ______________________________________.
a. a shift to the right of the supply curve; a movement down and to the right along a supply
curve
b. a movement down and to the right along a supply curve; a shift to the right of the supply
curve
Page 3
