G202 KREFT FINAL EXAMINATION TEST 1 2026
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ T1: Imagine that the NYC taxicab market is currently under-
providing rides relative to the socially efficient amount. If the NYC
council enacts a productive regulation that makes it harder and
more costly to obtain a taxicab license, what will be the impact on
social efficiency?
- Efficiency increases.
- Efficiency decreases.
- Efficiency remains the same as the productive regulation will not
change the number of taxi cabs in the market.
- We are unable to tell the effects of the productive regulation on
market efficiency. Answer: Efficiency decreases
◉ T1: Assume that the socially efficient output level in the
residential solar panel market is 1,000 units per week, but the
industry is only producing 800 units per week at current capacity.
The industry's under-production is causing
- a net cost on society, because the last panel produced had more
production costs than consumer value.
- society to lose out on a net benefit, as the next panel produced
would have more production costs than consumer value.
, - society to lose out on a net benefit, as the next panel produced
would have more consumer value than productive costs.
- a net cost on society, because the last panel produced had more
consumer value than productive costs. Answer: society to lose out
on a net benefit, as the next panel produced would have more
consumer value than productive costs.
◉ T1: Auto manufacturers are currently offering flex-fuel vehicles
that are designed to run on ethanol gasoline mixtures. An economist
recently analyzed the cost versus value consideration of these
vehicles and found that the market is currently buying
approximately the socially efficient amount of flex fuel vehicles.
Under lobbying pressure from the car manufacturers and
environmental groups, the federal government is considering a
$3,000 subsidy paid per flex fuel vehicle sold. If this subsidy goes
through, what would be the most likely impact on market efficiency?
- Efficiency stays the same as the subsidy will not change the
quantity of flex-fuel vehicles bought and sold.
- Efficiency decreases.
- We are unable to tell the effects of the subsidy on market efficiency.
- Efficiency increases Answer: Efficiency decreases
◉ T1: When thinking about the impact of government tools, which
of the following will expand a market's size?
Taxes only.
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ T1: Imagine that the NYC taxicab market is currently under-
providing rides relative to the socially efficient amount. If the NYC
council enacts a productive regulation that makes it harder and
more costly to obtain a taxicab license, what will be the impact on
social efficiency?
- Efficiency increases.
- Efficiency decreases.
- Efficiency remains the same as the productive regulation will not
change the number of taxi cabs in the market.
- We are unable to tell the effects of the productive regulation on
market efficiency. Answer: Efficiency decreases
◉ T1: Assume that the socially efficient output level in the
residential solar panel market is 1,000 units per week, but the
industry is only producing 800 units per week at current capacity.
The industry's under-production is causing
- a net cost on society, because the last panel produced had more
production costs than consumer value.
- society to lose out on a net benefit, as the next panel produced
would have more production costs than consumer value.
, - society to lose out on a net benefit, as the next panel produced
would have more consumer value than productive costs.
- a net cost on society, because the last panel produced had more
consumer value than productive costs. Answer: society to lose out
on a net benefit, as the next panel produced would have more
consumer value than productive costs.
◉ T1: Auto manufacturers are currently offering flex-fuel vehicles
that are designed to run on ethanol gasoline mixtures. An economist
recently analyzed the cost versus value consideration of these
vehicles and found that the market is currently buying
approximately the socially efficient amount of flex fuel vehicles.
Under lobbying pressure from the car manufacturers and
environmental groups, the federal government is considering a
$3,000 subsidy paid per flex fuel vehicle sold. If this subsidy goes
through, what would be the most likely impact on market efficiency?
- Efficiency stays the same as the subsidy will not change the
quantity of flex-fuel vehicles bought and sold.
- Efficiency decreases.
- We are unable to tell the effects of the subsidy on market efficiency.
- Efficiency increases Answer: Efficiency decreases
◉ T1: When thinking about the impact of government tools, which
of the following will expand a market's size?
Taxes only.
