Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 3RQ
To determine
The efficiency loss.
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The socially optimal outcome is the outcome that:
Select one:
a. has the most externalities.
b. is most efficient for society as a whole, including for buyers, sellers, and bystanders.
c. has the most benefits for society as a whole, regardless of the costs involved.
d. benefits the largest number of people.
What is true with market failure?
A. the market becomes more efficient in allocating the resources to its best uses
B. there is an overproduction of goods and services with positive externalities
C. there is an underproduction of goods and services with negative externalities
D. there is market concentration or less competition
E. no correct answer
An economically efficient level of smoking:
a.
means people would not smoke
b.
occurs at the market equilibrium
c.
would have to account for all costs but would be greater than zero
d.
would have to increase to provide more jobs for farmers and tobacco workers
Chapter 4 Solutions
Macroeconomics: Principles, Problems, & Policies
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Use marginal cost/marginal benefit analysis to...Ch. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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- If a price is within the bargaining range a. Both buyer and seller are better off. b. The buyer may be better off, but the seller is worse off. c. The buyer is worse off, but the seller may be better off. d. The good must be free of externalities.arrow_forwardA market failure in the form of an externality arises when a. not all costs and benefits are included in the price of a good b. a market fails to achieve equilibrium c. the benefits of consuming a good exceed the costs d. production costs are included in the price of a goodarrow_forwardThe National Hockey League decides to put a new franchise in Hamilton which is close to existing teams in Buffalo and Toronto. Which of the following best describes the impact of this decision? Select one: a. product-variety externality, which harms consumers b. business-stealing externality, which benefits consumers c. product-variety externality, which benefits consumers d. business-stealing externality, which harms consumersarrow_forward
- If a negative supply-side externality (also called a negative externality in production) occurs, then: a. The market provides the efficient allocation. b. The market under-provides the product, meaning the market allocation is less than the efficient allocation. c. The market does not provided the product, hence market failure occurs. d. The market over-provides the product, meaning the market allocation is more than the efficient allocation.arrow_forwardAn externality Select one: a. all answers are correct b. arises when property rights don’t exist or can’t be enforced. c. is a benefit or cost to parties who are not involved in a transaction. d. can be positive or negative.arrow_forwardPrice (P) S $4.00 $2.50 D $0.50 200 Quantity (Q) The market shown in the figure above is in equilibrium at the socially optimal quantity of 200 units. The Demand curve captures all social benefits to consumers, and the Supply curve captures all social costs to producers. In this case, Consumer Surplus will be: Select one: a. $100 b. $300 C. $200 d. $150arrow_forward
- If a positive demand-side externality (also called a positive externality in consumption) occurs, then: a. The market provides the efficient allocation. b. The market under-provides the product, meaning the market allocation is less than the efficient allocation. c. The market does not provided the product, hence market failure occurs. d. The market over-provides the product, meaning the market allocation is more than the efficient allocation.arrow_forwardWhen producing a good generates external costs, the producing firm's supply curve will Multiple Choicea. be vertical.b. overstate the total cost of production.c. be above (to the left of) the total-cost supply curve.d. understate the total cost of production.arrow_forwardPrice Ssocial Sinternal $7.00 $6.00 $5.00 D $4.00 Dinternal 3,000 3,500 Quantity externality. In the market shown in the diagram above, there is a Select one: a. negative production b. negative consumption c. positive production d. positive consumptionarrow_forward
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