A) They are equal.
B) The equilibrium quantity is greater than the socially optimal quantity.
C) The equilibrium quantity is less than the socially optimal quantity.
D) There is not enough information to answer the question.
Correct Answer
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Multiple Choice
A) private parties can bargain to reach an efficient outcome.
B) government assistance is necessary to reach an efficient outcome.
C) the assignment of legal rights can prevent externalities.
D) the initial distribution of property rights will determine the efficient outcome.
Correct Answer
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Multiple Choice
A) 200 units
B) 450 units
C) 500 units
D) 650 units
Correct Answer
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Multiple Choice
A) Q2.
B) Q3.
C) Q4.
D) Q5.
Correct Answer
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Short Answer
Correct Answer
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Multiple Choice
A) provide firms an incentive to research.
B) assign property rights to inventors.
C) protect the rights of inventors for their lifetimes.
D) internalize externalities.
Correct Answer
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True/False
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Multiple Choice
A) distort incentives.
B) move the allocation of resources away from the social optimum.
C) raise revenue for the government.
D) move the allocation of resources closer to the social optimum.
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Multiple Choice
A) charities and the Golden Rule.
B) charities and subsidies.
C) the Golden Rule and taxes.
D) taxes and subsidies.
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Multiple Choice
A) is always needed because private solutions can never be attained.
B) is needed when private solutions fail to arise.
C) will be needed only to correct for positive externalities.
D) will be needed only to correct for negative externalities.
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Multiple Choice
A) even if private parties experience substantial costs of bargaining.
B) even if the initial distribution of legal rights is skewed in favor of some private parties over others.
C) only when there is a large number of private parties that engage in bargaining.
D) All of the above are correct.
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Multiple Choice
A) neglect the external effects of their actions,but the market equilibrium is still efficient.
B) do not neglect the external effects of their actions,and the market equilibrium is efficient.
C) neglect the external effects of their actions,and the market equilibrium is not efficient.
D) do not neglect the external effects of their actions,and the market equilibrium is not efficient.
Correct Answer
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Multiple Choice
A) negative externality,and too few resources are devoted to research as a result.
B) negative externality,and too many resources are devoted to research as a result.
C) positive externality,and too few resources are devoted to research as a result.
D) positive externality,and too many resources are devoted to research as a result.
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Multiple Choice
A) inefficient.
B) unequal.
C) unnecessary.
D) overwhelmed.
Correct Answer
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Multiple Choice
A) the Coase theorem
B) the laws of supply and demand
C) the law of comparative advantage
D) the law of externalities
Correct Answer
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Multiple Choice
A) social welfare will be enhanced when some,but not all air pollution is eliminated.
B) social welfare is optimal when all air pollution is eliminated.
C) governments should encourage private firms to consider only private costs.
D) the free market result maximizes social welfare.
Correct Answer
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Multiple Choice
A) 2 units
B) 3 units
C) 4 units
D) 5 units
Correct Answer
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Multiple Choice
A) Social value exceeds private value,and market quantity exceeds the socially optimal quantity.
B) Social value is less than private value,and market quantity exceeds the socially optimal quantity.
C) Social value exceeds private value,and market quantity is less than the socially optimal quantity.
D) Social value seldom exceeds private value;therefore,social quantity is less than private quantity.
Correct Answer
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Multiple Choice
A) making it illegal to "disturb the peace."
B) having a well-funded animal control department.
C) subsidizing local animal shelters.
D) encouraging people to adopt cats.
Correct Answer
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Multiple Choice
A) can correct the market failure only in the case of positive externalities.
B) can correct the market failure only in the case of negative externalities.
C) can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality.
D) cannot correct for externalities due to the existence of patents.
Correct Answer
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