ECON 110 Read & Interact Schiller & Gephardt Chapter 9 solutions complete answers

ECON 110 Read & Interact Schiller & Gephardt Chapter 9 solutions complete answers 

 

When the government intervenes in the macroeconomy, one of its goals is to:

 

Payments to individuals for which no current goods or services are exchanged, such as Social Security, welfare, and unemployment benefits, are:

 

The ability to alter the market price of a good or a service is called   power.

 

Regulation   (decreases/increases) the cost of production because the firms must, as one example, operate and maintain pollution-control equipment.

 

(one word) action is a type of government intervention intended to alter market structure or prevent abuse of market power.

 

Faced with an emission charge, a private producer will _______ output.

 

Regulation of pollution raises the cost of production because:

 

Environmental policy is designed to eliminate the gap between private costs and social costs. An emissions charge can close this gap by _______ private marginal costs and thus encouraging _______ output.

 

Market-based environmental policy involves removing the gap between   cost and   cost.

 

The costs of an economic activity directly borne by the producer (excluding externalities) are known as   costs.

 

The costs of an economic activity directly borne by the producer (excluding externalities) are known as

 

The full resource costs of an economic activity, including externalities, are known as   costs.

 

When a market experiences an external benefit, which of the following is true?

 

If a firm were using a more expensive production process that reduces pollution, then

 

The market demand curve for a good that generates external costs reflects:

 

If the optimal output is less than the market output, then we can conclude that a(n)   externality exists.

 

The market will _______ goods that yield external benefits and _______ those that generate external costs.

 

Due to the free-rider dilemma, if a society wants a public good, _________ will have intervene.

 

Goods that have external costs result in a(n) ______ of the good.

 

Which of the following goods would be considered a private good?

 

If public goods were marketed like private goods, the end result might likely be a(n) _______ of public services, with everyone waiting for someone else to pay.

 

When your purchase (and consumption) of a good makes its purchase (and consumption) by another person impossible, the good is said to be a:

 

Due to the free-rider dilemma, some parts of society will conceal their desire for a public good. Identify these parts of society.

 

Which one of the following examples exemplifies a private good?

 

failure occurs when market forces produce a suboptimal mix of output.

 

The most desirable combination of output attainable with existing resources, technology, and social values is the ______ mix of output, and the combination of output produced by supply and demand forces is the _______ mix of output.

 

The doctrine of “leave it alone,” of nonintervention by government in the market mechanism, is known as

 

Laissez faire is

 

The most desirable combination of output attainable with existing resources, technology, and social values is called the       mix of output.

 

The most desirable combination of output attainable with existing resources, technology, and social values is the ______ mix of output and the combination of output produced by supply and demand forces is the _______ mix of output.

 

The use of market prices and sales to signal desired outputs (or resource allocation) is referred to as

 

In most conditions, the _____ ensures that the right amount of a particular product gets produced.

 

The doctrine of “leave it alone,” of nonintervention by government in the market mechanism is known as

 

The most desirable combination of output attainable with existing resources, technology, and social values is called the:

 

When market forces fail to produce an optimal mix of output it is known as

 

Match the following:

 

A market       implies that the forces of supply and demand have not led us to the best point on the production possibilities curve.

 

The       mechanism is the use of market prices and sales to signal desired outputs (or resource allocations).

 

Market failures can be used to justify:

 

In most conditions, the       mechanism ensures that the right amount of a particular product gets produced.

 

Which of the following are a source of market failure?

 

When your purchase (and consumption) of a good makes it’s purchase (and consumption) by another person impossible, the good is said to be a:

 

An imperfection in the market mechanism that prevents optimal outcomes is called:

 

Examples of public goods include:

 

If the forces of supply and demand have not led us to the best point on the production possibilities curve, then the market system is experiencing

 

Within reason, everyone can benefit from ______ goods and there is no effective way of excluding individuals from the benefits derived from them once they exist.

 

Which of the following justifies government intervention in the economy?

 

The situation when people can receive the benefits from a good without having to pay for it is called the      -rider problem.

 

The four specific sources of microeconomic market failure are

 

The ______ problem makes it difficult to determine the true demand for a good.

 

Which of the following would be considered private goods?

 

National defense and street lighting are examples of

 

A good is known as a       good if one person’s consumption of the good does not preclude consumption of the same good by others.

 

The situation occurring when people can receive the benefits from a good without having to pay for it is known as the ______ problem.

 

The       characteristic of a private good is the ability of a seller to prevent people who did not pay for a product from obtaining its benefits.

 

Due to the free rider dilemma, some parts of society will conceal their desire for a public good. Identify these parts of society.

 

Which of the following goods could be classified as nonexcludable (no exclusion)?

 

If public goods were marketed like private goods, the end result might likely be a(n) _______ of public services, everyone would wait for someone else to pay.

 

Which of the following exemplifies a good that cannot be jointly consumed? (Select all that apply.)

 

The market tends to _______ public goods and _______ private goods.

 

Public goods are financed through government       revenue.

 

______ means that sellers can keep people who do not pay for a product from using the product.

 

Which of the following is an example of the provision of a public good by the government?

 

Which of the following goods are excludable?

 

The problem is that the market tends to _______ public goods. If we want more public goods, we need a nonmarket force—government intervention—to get them.

 

If public goods were marketed like private goods, there would be an _______ of public goods.

 

A(n)       (Enter one word) causes some of the benefits or costs of a market transaction to be passed on to a third party.

 

Which of the following statements are true of markets?

 

Goods that generate negative externalities (or external costs) result in an ______ of those goods and goods that generate positive externalities will result in an ________ of those goods.

 

Government can finance the provision of public goods through      . (Enter one word in the blank)

 

If society wants a public good:

 

Which of the following are external costs associated with market activities?

 

A cost or a benefit accruing to an individual or group, a third party, that is external to a market transaction is known as:

 

Market demand plus externalities is

 

The result of positive externalities (external benefits) is that the market produces ______ units of a product.

 

A ______ is a market failure that occurs when a third party to a transaction experiences uncompensated costs.

 

The ______ curve for a good that generates external costs reflects only the direct private benefit to the individuals who consume the product.

 

If the optimal output is less than the market output, then we can conclude that a       externality exists.

 

Water and air pollution both result in a market failure known as a(n)

 

Which of the following are examples of substituting external cost for private cost?

 

Social demand is equal to

 

Which of the following are examples of goods or services exhibiting external benefits?

 

If a third party to a market transaction is experiencing an uncompensated cost, then the transaction results in a market failure known as a ______ externality.

 

When the social demand curve is above the market demand curve, there are external      .

 

Whenever external costs exist, market demand will be _____ of social demand.

 

When positive external benefits occur, the market demand curve lies to the ______ of, or ______ the social demand curve.

 

Which of the following occurs when the optimal output is less than the market output?

 

Two examples of government corrections for underproduction in a market that generates external benefits are:

 

When you litter you are:

 

Which of the following are examples of markets that are more likely to experience external benefits?

 

A power plant creating air pollution is an example of:

 

When positive external benefits occur, the social demand curve lies       the market demand curve.

 

If a firm was using a more expensive producion process that reduces pollution, then

 

When positive external benefits occur:

 

Government can attempt to correct a market experiencing external       by subsidizing producers and/or consumers, or by government production of the product.

 

Firms tend to be profit-     .

 

True or false: Externalities can exist with only consumption decisions.

 

People tend to maximize their personal welfare, balancing _______ benefits against _______ costs.

 

Whenever external costs exist, a private firm

 

The full resource costs of an economic activity, including externalities is known as       costs.

 

Firms tend to

 

The costs of an economic activity directly borne by the producer (excluding externalities) is known as       costs.

 

People tend to maximize their _______, balancing private benefits against private costs.

 

Whenever _______, a private firm will not allocate its resources and operate its plant in such a way as to maximize social welfare.

 

External costs equal _______ costs minus _______ costs.

 

The full resource costs of an economic activity, including externalities is known as

 

When external costs exist, the market will produce goods and services that generate too much pollution, leading to a _______.

 

Emission fees and regulations are two ways government can correct for:

 

The costs of an economic activity directly borne by the producer (excluding externalities) is known as

 

Market based environmental policy involves removing the gap between       cost and       cost.

 

A fee imposed on polluters, based on the quantity of pollution is

 

External costs equal

 

When external costs exist, the market will produce goods and services that generate _____ pollution, creating a market failure.

 

Which two of the following are ways for the government to correct for external costs?

 

Faced with an emission charge a private producer will _______ output.

 

Environmental policy is designed to eliminate the gap between _______. An emissions charge can be used to close this gap by increasing private marginal costs and thus encouraging reduced output.

 

The direct way to reduce negative externalities from a certain activity is to pass       limiting that activity.

 

An emission charge is

 

Regulation of pollution raise the cost of production because:

 

The ability to alter the market price of a good or a service is called:

 

Market power can result in       prices to consumers, enriching the firm.

 

An emission charge increases private marginal cost and _______ output.

 

_______ is a type of government intervention intended to alter market structure or prevent abuse of market power.

 

The direct way to reduce negative externalities from a certain activity is:

 

Which of the following are examples of antitrust policy in the U.S.?

 

Regulation       the cost of production because the firms must, as one example, operate and maintain pollution control equipment.

 

The general ability to alter the market price of a good or service is referred to as

 

The market mechanism may make some people rich while leaving others poor. If such outcomes violate our vision of fairness, we say this is the market failure of:

 

Market power can result in _______ prices to consumers, enriching the firm.

 

The government alters the distribution of income with taxes and

 

      (one word) is a type of government intervention intended to alter market structure or prevent abuse of market power.

 

Payments to individuals for which no current goods or services are exchanged, like Social Security, welfare, and unemployment benefits are:

 

When the market does not distribute output in a fair way, we say this is the market failure of: 

 

Social Security, Medicare, and Food stamps are all examples of

 

_______ are the principal mechanisms to redistribute income in the United States.

 

Income transfers are

 

When the government intervenes in the macro economy one of its goals is:

 

Government intervention that fails to improve economic outcomes is called:

 

Examples of income transfers include:

 

The goals of macro intervention are

 

Government failure is any government intervention that fails to       economic outcomes.

 

_______ is the use of market prices to signal desired outputs (or resource allocations).

 

When market forces produce a suboptimal mix of output it is known as ________ failure.

 

When there is no effective way of keeping individuals from the benefit of a good once it is produced, the good is

 

A ________ good is a good that one person’s consumption of a good does not preclude consumption of the good by others.

 

Because the link between paying and consuming is broken when it comes to public goods, people are reluctant to buy what they can get free. Thus, if public goods were marketed like private goods, the end result might likely be a(n) _______ of public services.

 

The four specific sources of ________(one word) failure are public goods, market power, externalities, and inequity.

 

Due to the free rider dilemma, if a society wants a public good, _________ will have intervene.

 

Which of the following could cause external costs?

 

The market tends to underproduce _______ goods and overproduce _______ goods.

 

An externality causes some of the benefits or costs of a market activity to be passed on to a:

 

A negative externality occurs when:

 

The ______ curve for a good reflects only the direct private benefit to the individuals who consume the product.

 

Government can attempt to correct a market experiencing a external benefits by directly producing the good, or by ______ producers and/or consumers of the good.

 

True or false: Externalities can exist with only production decisions.

 

Environmental policy is designed to eliminate the gap between private costs and social costs. An emissions charge can be used to close this gap by _______ private marginal costs and thus encouraging _______ output.

 

Antitrust is government policy that aims to prevent the abuse of:

 

Which of the following terms is used to describe economically inefficient outcomes caused by shortcomings in the public sector?

 

When government intervention fails to correct market failure, the result is 

 

The four specific sources of microeconomic failure are 

 

The full resource costs of an economic activity including externalities is known as _______ costs.

 

The goals of macro invention are

 

If a firm was using a more expensive production process that reduces pollution, then

 

A positive externality is a ______ of market activity that is borne by a third party.

 

True or false: A public good means that when one person buys and consumes a product, it is not available for someone else to buy or consume

 

The ability to alter the market price of a good or service is called _____ power.

 

A _______ is a firm that produces the entire market supply of a particular good or service.

 

The costs of an economic activity directly borne by the producer is known as ___________ costs.

 

Faced with an emission charge a private producer will ______ output.

 

The market failure of inequity implies that: 

 

Laissez Fair is

 

An emission charge increase private marginal cost and __________ output.

 

Education funding by government is an example of a _______ externality.

 

If a good is jointly consumed and non excludable then it is known as a _______ good.

 

A market ______ implies that the forces of supply and demand have not led to us to the best point on the PPC.

 

A fee imposed on polluters based on the quantity of pollution is

 

Which of the following are true statements about markets and public goods?

 

The market will _______ goods that yield external benefits and ________ those that generate external costs

 

________ and ___________ are the principal mechanisms to redistribute income in the United States.

 

Government can finance the provision of public good through _______.

 

When a market experiences a positive externality, which of the following is true?

 

True or false: Firms tend to be profit minimizers.

 

Direct regulation _____ the marginal cost of production because the firms must operate and maintain pollution control equipment.

 

When external benefits occur:

 

If public goods were marketed like private goods, then there would be an _______ of public goods

 

Public goods are distinguished by:

 

Goods that have external costs result in a(n) _______ of the good.

 

Transfer payments are

 

The free-rider problem makes it:

 

If we want more public goods, _______ intervention is necessary.

 

The full resource of an economic activity, including externalities is known as _______ costs.

 

Whenever external costs exist, a private firm

 

A positive externality is a market activity that generates a(n):

 

Because some individuals do not consume a beneficial product but accrue benefits from others who do consume the product benefiting society, producers do which of the following?