economics mcq homework with A+ answers

1) Once a firm is forced to consider an external cost, the price of its product will

a. increase and output will decrease

b. increase and output will increase

c. decrease and output will decrease

1. decrease and output will increase

2) Which of the following would be classified as an external cost?

a. as more firms began hiring computer programmers, the salaries of computer programmers increased and therefore the firm's cost of production increased.

b. you eat too much pizza and end up with a stomach ache

c. you are not able to study at night because there is so much noise coming from the dorm room next to yours.

d. when you purchase a prescription drug you are not made fully aware of all the possible side effects that may result from taking the dug.

3) If the government taxes a firm that is generating an external cost, the price of the firm's product will.

a. increase and output will decrease

b. increase and output will increase

c. decrease and output will decrease

d. decrease and output will increase

4) If, while producing goods and services, a factory is producing pollution and not incurring the cost of this pollution, then a (n) exists.

a. government failure

b. market failure

c. acceptable outcome

d. none of the above

5) Recall the application about the marginal cost and marginal benefit of reducing methane emissions. What does the optimal level of methane abatement depend on?

a. the level at which the polluting firms are able to maximize their profits

b. the total cost of abatement

c. the marginal benefit of abatement

d. it is possible to determine an optimal level of methane

6) Jamal and Lauren live in the countryside 30 minutes from a city in Virginia. They moved there because they wanted to enjoy the fresh air. After a year of living in their house, the 200 acres that surround their neighborhood were zoned for an industrial property. A paper mill was built on the land and now emits strong gases that can be smelled from miles away. The paper mill's emission of gases is an example of a (n

a. public good

b. good that imposes an external cost

c. good that provides an external benefit

d. efficient good

7) Markets that have external costs will produce______ output than the socially efficient level, whereas markets that have external benefits will produce_______output than the socially efficient level.

a. less; less

b. more; more

c. more; less

d. less; more

8) When the government imposes a tax on a firm that generates external costs, the tax is

a. always borne entirely by the firm

b. always borne entirely by the consumer

c. usually borne by both the firm and the consumer

d. borne only by the government

9) Which of the following would be an example of an external benefit?

a. More people start to ride the bus and as a result air pollution is reduced

b. Firms are able to reduce their costs of production by using a more efficient technology

c. The government requires polluting firms to pay a special tax

d. A firm has just gotten permission to open a landfill on property that is adjacent to your home

10) The study of external costs I a major concern of

a. labor economics

b. international economics

c. environmental economics

d. macroeconomists

11) The idea behind the pollution tax equal to the external cost per unit of pollution is to

a. increase the social benefit to be above the marginal cost

b. internalize the externality

c. allow the firm to evade external costs

d. drive polluting firms out of developed countries

12) The government imposes taxes on firms that generate external costs in an effort to

a. make it easier for economists to measure external costs

b. lead to a zero level of output

c. force decision makers to consider the full costs of their actions

d. lower the firm's costs of production

13) The biggest problem with using a tax as a way to solve an externality problem is that

a. the tax sometimes increases the external cost

b. damages must be estimated n financial terms to determine the correct level of the tax

c. the firm will pass the entire tax onto the consumer

d. the commerce clause forbids such taxes

14) An external cost of production is

a. a cost incurred by someone other than the producer

b. the production cost borne by a producer

c. the result of the sum of private and social cost

d. another word for a tax

15) A harbor lighthouse tat guides approaching ships is an example of

a. a public good

b. a private good

c. a monopoly

d. a good that is rival

16) Private goods are

a. rival in consumption and their benefits are excludable

b. nonrival in consumption and their benefit are excludable

c. nonrival in consumption and their benefits are nonexcludable

d. rival in consumption and their benefits are nonexcludable

17) Which of the following would NOT be considered a public good?

a. national defense

b. radio broadcasts

c. police protection

d. a newspaper

18) Goods that are nonrival in consumption and that have benefits that are nonexcludable are

a. private goods

b. neighbor effects

c. public goods

d. none of the above

19) Based on society's perspective, what are the benefits from pollution abatement?

a. better health

b. increased enjoyment of the natural environment

c. lower production costs

d. all of the above

20) Taxes on a firm's external costs

a. are designed to encourage more production

b. are meant to force some firms out of business

c. are simply meat to force decision makers to consider the full costs of their actions

d. are designed primarily as a way to raise money so that the government can compensate the victims of the spillover

21) You are the owner and only employee of a company that repairs computers. Last year, you earned total revenues of 75,000. Your costs for equipment, rent and supplies were 10,000. To start this business you quit a job at another computer software

a. 10,000

b. 40,000

c. 50,000

d. 75,000

22) You are the owner and only employee of a company that repairs computers. Last year, you earned total revenues of 75,000. Your costs for equipment, rent and supplies were 10,000. To start this business you quit a job at another computer software firm that paid 40,000 a year. Last year, your economic profits were

a. 100,000

b. 75,000

c. 50,000

d. 25,000

23) Which of the following is a reason why the marginal product increase as output increases?

a. decreasing repetition

b. increasing continuity

c. both A and B

d. neither A nor B

24) As more of anyone good s consumed in a given period, its

a. total utility decreases, then remains constant

b. marginal utility decreases

c. total utility decreases, then increases

d. marginal utility increases

25) Dan owns a factor that manufactures smartphones. He has many costs every month to keep his factory running. Which of the following is one of Dan's fixed costs?

a. plastic used to make the smartphones

b. his electricity bill for the factory

c. his mortgage on the factory

d. memory devices used to store music and video on the smartphones

26) According to the law of diminishing marginal utility

a. as the consumption of a particular good increases, marginal utility increases

b. as the consumption of a particular good increases, marginal utility decreases

c. total utility is negative

d. both and c are correct

27) From 1998, to 2010, the cost of electricity produced with nuclear power has______and the cost of electricity produced with sola power has_________

a. increased; increased

b. increased; decreased

c. decreased; increased

d. decreased; decreased

28) Brandon eats four slices of pizza on a Sunday night but admits each slice of pizza doesn't taste as delicious as the previous one. This suggests that for Brandon

a. the marginal utility of a slice of pizza is positive but decreasing

b. the marginal utility of a slice of pizza is negative but increasing

c. the total utility of slice of pizza is declining by larger and larger increments

d. the total utility of slice of pizza is increasing by larger and larger increments

29) The short run can be defined as any period of time

a. less than one year

b. in which some inputs are fixed

c. in which all inputs are variable

d. in which price is fixed

30) Utility can be thought of as the same as

a. opportunity cost

b. satisfaction

c. choice

d. none of the above

31) The period of time when a firm is unable to change all inputs, or factors of production, is called the

a. economic term

b. short run

c. accounting term

d. long run

32) Mario has a company that produces plastic freezer bags. His company objective is to maximize

a. his company's revenues

b. his company's total out-of-pocket cost

c. his company's opportunity costs of each factor of production

d. his company's economic profits, the difference between total revenue and total cost

33) The equimarginal rule

a. equates the marginal utility per dollar spent on each good purchased

b. states that in order to maximize utility the consumer should buy more of those goods with a high marginal utility

c. states that in order to maximize utility the consumer should buy more of those goods that cost less

d. none of the above

34) Consumers should allocate their scarce income so that

a. the marginal utility for all goods consumed is zero

b. the marginal utility for all goods consumed is equal

c. the marginal utility divided by price is equal for all goods consumed

d. the marginal utility divided by price is maximized for all goods consumed

35) Which of the following statements about fixed costs is correct?

a. fixed costs are not opportunity costs

b. fixed costs must be paid even if the firm's output is zero

c. fixed costs are always the largest portion of total costs

1. none of the above

36) Suppose that Erin spends all of her income on two goods: pizza and fiction novels. If the price of pizza rises, then

a. the current marginal utility per dollar spent on pizza will rise

b. the current marginal utility per dollar spent on pizza will fall

c. the current marginal utility per dollar spent on fiction novels will rise

d. the current marginal utility per dollar spent on fiction novels will fall

37) The principle of opportunity cost is

a. what someone sacrifices to get something

b. the satisfaction of obtaining the best next alternative

c. the choice someone has to make between two different goods

d. the cost of paying for something someone needs