Econ Test 3

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economists use the term externalities to refer to: consequences of actions that actors ignore in their decision making
positive externalities are created by people when they act in ways that: benefit others without their intent to do so
a negative externality clearly occurs when: a person's action unintentionally imposes costs on other people
Bongo plays drums in his parent's garage after school. what can be sure of?: Bongo expects to benefit from drumming
a local bar provides free pretzels and peanuts and cheap drinks on Monday night. But soon a fight breaks out in the parking lot between two quarreling patrons. Neighboring homeowners awaken as a result, and call the police. What can we clearly conclude?: the fighters impose a negative externality on the neighboring homeowners
A great deal of damage is done to the enviroment in urban US because: the enviroment is treated as everyone's property and therefore as no one's property
Freeways in large cities tend to be so congested during rush hours that they offer little or no advantage over non-freeway routes because: no monetary fee is charged for the use of freeways during rush hours
congestion pricing is: an attempt to internalize the external costs of driving

is a financial instrument used to manage road demand and reduce congestion by charging road users for their direct use of the road in peak times.
How is a politician similar to an entrepeneur: each advances a project only if the expected marginal benefits exceeed teh expected marginal costs
transaction costs in economic theory refer to: costs of arranging and carrying out voluntary exchanges
if no beautification projects were undertaken in a city except by private individuals or firms, that city would almost surely be less beautiful than otherwise comparable cities because: it is extremely difficult to induce people to pay on a voluntary basis for the pleasure they receive from urban beautification projects
In the economic way of thinking, all ignorance is ultimately: rational ignorance
a price support on milk is not in the interest of milk drinkers. then why do elected public officials successfully implement milk price supports?: a small number of dairy farmer households gain a great deal, while the costs of the support program is spread among millions of other milk drinking households
An important difference between goverment and privately owned enterprises is that goverment: can more easily use negative incentives to obtain resources
the textbook argues that goverment supplies police protection because: it is difficult to supply police protection exclusively to those who pay for it
The argument from positive externalities for goverment subsidies to education assumes or asserts that: Students capture only part of the benefits from attending school
legislators in a democracy are more likely to support special interests than the broad interests of citizens generally because: the pay attention to the people paying attention to them
a free rider in economic theory is someone who: can obtain a desired good without payng for it and therefore has no incentive to contribute to the costs of making it available
From which of the following goods is it most difficult to exclude free riders: a radio program
The problem of "free riders" arises in a society when goods: cant be provided exclusively to those who pay for them
a proportional income tax structure implies that: marginal tax rates are the same regardless of the level of taxable income
a tax rate system characterized by higher marginal tax rates as income increases is known as a: progressive tax system
the marginal tax rate is equal to: the change in the tax payment divided by the change in income
a merit good is one which: has been deemed socially desirable via the political process
pollution is apt to lead to a market failure in which there is: an overallocation of resources in production
the largest share of federal goverment tax receipts is derived from: individual income taxes
in the absence of goverment: public goods are likely to be underprovided
which of the following would be classified as a private good?: clothes
one characteristic of a public good is that it: can be consumed simultaneously by many individuals
in the short run, if firms were forced to take into account the full social costs of production, then: output and pollution levels would decrease
The crux of the problem of pollution is: property rights that are poorly defined or expensive to enforce
the inflation-corrected price of most resources has been: falling for decades
recycling paper products may not save trees because: most trees are planted to produce paper and that land would be put to alternative uses
suppose ther are two factories on a river, and both need clean water for their production processes. the upstream factory takes in clean water and dumps dirty water back into the river. The downstream firm must clean up the water it gets from teh river b: the upstream factory's private costs are less than its social costs, and its external costs are borne by the downstream factory
the marginal benefit of pollution abatement: decreases as pollution abatement (suspension) increases because of the law of diminishing marginal utility
Buffalo in the US almost became instinct while cattle have never been close to extinct. the difference is due to: the use of private property rights on cattle relative to buffalo
economic theory suggests that if natural resources can be held as private property, then: owners will have an incentive not to abuse them
If a good is produced by firms that generate external costs, the price consumers pay: will be too low
in economic analysis, the optimal level of pollution: is where the marginal benefit from further reduction equals the marginal cost of further reduction
one difficulty in using voluntary transactions to internalize externalities is taht: transaction costs of coming to an agreement can be very large when numerous people are involved
T/F-In chapter 19 of the Economics of Public Issues book, MBN write that CAFE standards actually caused the rise of people using SUV's taht use more gasoline: false
what is one major cost of the CAFE standard: more light cars have to be produced which are more dangerous in accidents
the authors pose that the real reason CAFE standards were imposed (to lower gas prices) rather than a more direct tax on gasoline was because: b. domestic car producers benefited
c. politicians responded rationally to incentives they faced
T/F-superfund hs to consider the marginal benefits and marginal costs of forcing a clean-up: false
T/F-hazlitt being a supporter of the free-market was aganst goverment spending: false
T/F-According to the freeloaders video, the economist John Stossel interviewed argued taht sports stadiums create jobs and are a positive influence on local economy: false
T/F-walter williams said that politicians and thieves are exactly the same: False
T/F-rent-seeking behavior explains many political decisions: true
T/F-all scientists agree that global warming is a threat: false
T/F-stossel argued that many enviromentalists are indoctrinating the youth of America: true

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