Please help me solve these multiple choice questions fo my college level Macro E
ID: 1139735 • Letter: P
Question
Please help me solve these multiple choice questions fo my college level Macro Econ class
1) Consider a good produced in a competitive market, but one with external benefits. The market price will result in too ______________ of the good for economic efficiency. The market price will be ______________ than the price that would convince producers to produce the efficient amount
a) little: lower
b) little : higher
c) much : lower
d) much : higher
2) Consider a good produced in a competitive market that has external costs. Too ______________ of the good will be produced for economic efficiency and the price will be ______________ than the price that will convince consumers to purchase the efficient amount.
a) little: lower
b) little : higher
c) much : lower
d) much : higher
3) Which of the following descriptions best characterizes public goods?
a)Public goods are those where it is hard to keep non-payers from using the good, but their use of the good does not negatively impact others’ ability to use it.
b)Public goods are those where it is hard to keep non-payers from using the good, and their use of the good negatively impacts others’ ability to use it.
c)Public goods are those without an external cost of production or an external benefit of production.
d)Public goods are those where individual consumers can be excluded from using the good, but the marginal cost is zero and so an infinite number of goods should be produced.
4) Consider a good with external costs. Which of the following best describes why the market does not produce an allocatively efficient amount?
a)The marginal benefit to consumers exceeds the marginal private cost of production and the marginal social cost of production.
b)The marginal social cost exceeds the marginal social benefit.
c)The marginal social benefit exceeds the marginal social cost.
d)The marginal private cost of production and the marginal social cost exceed the marginal benefit to consumers.
5)Consider a good with external costs. Which of the following descriptions characterizes quantities of goods between the market equilibrium quantity and the allocatively efficient quantity?
a)These quantities will not be produced by the private market, but the government can add these quantities to production using a subsidy, resulting in higher economic efficiency.
b)These quantities will not be produced by the private market, but the government can add these quantities to production using a tax, resulting in higher economic efficiency.
c)These quantities will be produced by the private market, but the government can eliminate these quantities from production using a subsidy, resulting in higher economic efficiency.
d)These quantities will be produced by the private market, but the government can eliminate these quantities from production using a tax, resulting in higher economic efficiency.
6)One market characterized by incomplete information for consumers is the used car market. In the used car market, consumers don’t know the condition of the car being sold and therefore cannot accurately project their marginal benefit from consuming the car. Suppose that consumers distrust used car salesmen and expect the worst from the cars they sell. How will the quantity of used cars sold in the used car market compare to the efficient quantity and how will the price of used cars sold in the used car market compare to the price when the efficient quantity is sold?
a)The quantity in the used car market will be too low relative to the efficient quantity and the price will be too low.
b)The quantity in the used car market will be too high relative to the efficient quantity and the price will be too low.
c)The quantity in the used car market will be too low relative to the efficient quantity and the price will be too high.
d)The quantity in the used car market will be too high relative to the efficient quantity and the price will be too high.
7)A U.S. company sends a lobbyist to Washington, D.C. to argue for increased tariffs on imported goods from China that compete with the company’s own products. Which of the following represents an inefficiency in government due to misplaced incentives?
a)The lobbyist is successful at convincing legislators to pass the legislation, and American consumers pay higher prices.
b)The lobbyist fails because legislators fear their constituents will be upset at the price increases.
c)The lobbyist is successful at convincing the legislators to put the legislation up for a vote, but it fails to get a majority of the votes.
d)The lobbyist fails because there are many other lobbyists in town arguing for similar tariffs, but they cannot agree on the size of the tariff to be enforced.
8) Your local government is considering building a new highway bypass to circumvent your city. The bypass will traverse private property as it makes its way around the city and may even require some individuals to move residences. Which of the following is NOT a justifiable concern regarding the decision-making process or the construction of the bypass?
a)Because there is no competition within local government, the project might be completed in an inefficient manner, costing taxpayers more than necessary.
b)It is difficult to estimate how much a new highway bypass is worth to citizens, and the government may have incorrectly estimated the benefits of this project.
c)Because the bypass will need to traverse private properties and disrupt some people’s property and lives, they may lobby against the project even it if it has a positive net benefit to all of the city’s citizens.
d)Because private contractors are often licensed and bonded, but the government is not, if the government builds the new bypass themselves, there is likely to be a greater number of safety violations.
9)Suppose the government chooses to provide a public good at a zero price, and the increased consumption makes it so that one person’s use begins to interfere with others’ use. Think of a crowded road or a crowded park. What should the government do now to keep this market efficient?
a)Stop providing the good.
b)Close the goods to users at peak demand times.
c)Pay consumers to use the good.
d)Add prices that reflect the costs of an individual’s use of the good.
Explanation / Answer
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Answer-
Consider a good produced in a competitive market, but one with external benefits. The market price will result in too much of the good for economic efficiency. The market price will be lower than the price that would convince producers to produce the efficient amount
Explanation- Much- the good being produced here is done in the competitive market and hence the goods will affect the economic efficiency and also it will affect the externalities, which are affecting the economy. This is owing to the fact that the product is having implications in the economy because of the external benefits that is being derived from it.
Lower- The market price will be lower because if the price go any higher then the producer will not be willing to produce the product and they may also give up on the product. Hence the producer to produce and efficient amount will always aim for a lower than expected price.
Hence option c is correct.