O O O O O (J 2.(06.01 MC) Which of the following scenarios could describe a market experiencing a negative production externality? (3 points) Optimal social quantity will be less than the private unregulated quantity, and the optimal social price will be greater than the private price. Optimal social quantity will equal private quantity, and social price will equal private price. Optimal social quantity will be less than the private unregulated quantity, and social price will be less than private price. Optimal social quantity will be greater than the private unregulated quantity, and social price will be less than private price. Optimal social quantity will be greater than the private unregulated quantity, and social price will be greater than private price. O O O O O Use the graph to answer the question that follows. (3 points) All changes saved 35 Price ($) 0 5 10 15 20 25 30 35 40 45 Quantity What is the market equilibrium quantity and price at which there is no government regulation? 15,$17.50 20, $15 30,825 35, $22.50 0 Indeterminate O O O O [J 4.(06.02 MC) Which of the following could lead to an externality? (3 points) Increased competition Regulation of production or consumption Minimal or zero transaction costs Perfectly symmetric information Unclear property rights O O O (J 9.(06.03 MC) Why do private businesses underproduce public goods? (3 points) They are non-excludable, and so it is difficult to earn profits by producing the good. They are rivalrous, and so only one producer can supply the good. They are excludable, and so there are too few consumers available to buy the good. They are non-rivalrous, and so market power will limit output of the good. They are non-affordable, and so there are no consumers willing to purchase the good. O O O (J 10. (06.04 MC) A per-unit tax on a good with relatively elastic supply will result in (3 points) more deadweight loss than if demand were elastic a higher tax burden on consumers than on producers less tax revenue than if demand were elastic a lower tax burden on consumers than on producers a tax burden that is equally distributed between consumers and producers O O O O (J 7.(06.03 MC) Which of the following scenarios best exemplifies a non-excludable and non-rivalrous good? (3 points) An uncongested river in a state where people can fish A wireless internet service with password protection A tornado warning siren An online newspaper requiring a subscription A pair of shoes made by a popular name brand O O O O O (J 16.(06.05MC) Which of the following is a reason for increased income inequality? (3 points) There is a decrease in the productive capacity of capital so that wages and salaries are instead paid t an improving labor force. Taxes on earnings are collected each year, and the amount per worker is based on a progressive calculation. Market wages are rising, and so the unemployed are incentivized to find a job. People in a society do not begin with the same human capital, social capital, or bargaining power. The structure of the labor union is reorganized such that their bargaining power is increased c significantly. o O O O O 8 & Percentage of Income In 2010, 20 percent; 40 percent 40 percent; 10 percent 40 percent; 20 percent 40 percent; 80 percent 80 percent: 60 percent All changes saved 60 80 Percentage of Households of the households earned of the income in this economy. 100