Econ 202 Final Exam UPDATED ACTUAL Questions and
CORRECT Answers
Vertical distance between the market demand curve An externality affecting demand can be measured graphically as the
and the social demand curve.
Underproduction of public goods. The optimal mix of output may not be produced by an economy because of
the existence of
Public goods. The federal government's role as the provider of national defense is justified by
considerations of
There is market failure. Using Figure 4.1, suppose that point B represents the optimal mix of output for a
society. If market forces cause society to produce and consume at point C,
then
Cannot be denied to consumers who have not paid In economics, a public good
The use of market prices and sales to signal desired The term market mechanism refers to
output.
Resources, technology, and social values. The optimal mix of output is the most desirable combination of output
attainable with existing
Market power. What is a source of market failure?
Good with an external cost. If Good X has social demand that is less than market demand, then Good X
must be a
V-W, S-R Use the following figure to answer the questions below.
Overproducing Private goods?
Underproducing Public goods?
The release of carbon dioxide into the atmosphere. The greenhouse effect is largely caused by
, A passenger on a train littering. An example of a negative externality in consumption is
Secondhand smoke in a restaurant. All of the following are negative externalities in production except
Carbon dioxide emissions from the production of steel.
Thermal pollution into a river from an electric power plant.
Secondhand smoke in a restaurant.
Acid rain produced by power plants.
The opportunity cost of resources used to protect the The costs of environmental protection can be measured by
environment.
Overproduction of chemicals and an underproduction A chemical-producing firm is located just upstream from an electric power
of electric power plant. Instead of the more expensive procedure of burying its wastes, the
chemical-producing firm begins dumping its waste into the stream. This causes
increased variable costs for the power plant, which uses water from the stream
to cool its turbines. From society's viewpoint, the chemical producer's pollution
causes an
Optimal production of chemicals and electric power.
Overproduction of chemicals and an underproduction of electric power.
Optimal production of electric power and a suboptimal production of
chemicals.
Underproduction of chemicals and an overproduction of electric power.
Firm C which firm has the greatest difference between social and private costs?
CORRECT Answers
Vertical distance between the market demand curve An externality affecting demand can be measured graphically as the
and the social demand curve.
Underproduction of public goods. The optimal mix of output may not be produced by an economy because of
the existence of
Public goods. The federal government's role as the provider of national defense is justified by
considerations of
There is market failure. Using Figure 4.1, suppose that point B represents the optimal mix of output for a
society. If market forces cause society to produce and consume at point C,
then
Cannot be denied to consumers who have not paid In economics, a public good
The use of market prices and sales to signal desired The term market mechanism refers to
output.
Resources, technology, and social values. The optimal mix of output is the most desirable combination of output
attainable with existing
Market power. What is a source of market failure?
Good with an external cost. If Good X has social demand that is less than market demand, then Good X
must be a
V-W, S-R Use the following figure to answer the questions below.
Overproducing Private goods?
Underproducing Public goods?
The release of carbon dioxide into the atmosphere. The greenhouse effect is largely caused by
, A passenger on a train littering. An example of a negative externality in consumption is
Secondhand smoke in a restaurant. All of the following are negative externalities in production except
Carbon dioxide emissions from the production of steel.
Thermal pollution into a river from an electric power plant.
Secondhand smoke in a restaurant.
Acid rain produced by power plants.
The opportunity cost of resources used to protect the The costs of environmental protection can be measured by
environment.
Overproduction of chemicals and an underproduction A chemical-producing firm is located just upstream from an electric power
of electric power plant. Instead of the more expensive procedure of burying its wastes, the
chemical-producing firm begins dumping its waste into the stream. This causes
increased variable costs for the power plant, which uses water from the stream
to cool its turbines. From society's viewpoint, the chemical producer's pollution
causes an
Optimal production of chemicals and electric power.
Overproduction of chemicals and an underproduction of electric power.
Optimal production of electric power and a suboptimal production of
chemicals.
Underproduction of chemicals and an overproduction of electric power.
Firm C which firm has the greatest difference between social and private costs?
