Question 1 (1 point) The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below. Price Quantity Quantity Supplied Quantity Supplied Demanded without Paying after Paying Social Social Costs Costs 100 0 120 75 80 10 100 50 55 30 90 30 40 55 85 25 30 80 80 20 20 100 65 15The equilibrium price and quantity when only private costs are taken into account are O a) Price = $40, Quantity = 55 O b) Price = $30, Quantity = 20 ( c) price = $55, Quantity = 30 O d) Price = $30, Quantity = 80Question 2 (1 point) The main categories of market-oriented approaches to pollution control are ( a) pollution permits; defined property rights; marketable charges. O b) redefined property rights; pollution permits; marketable charges. (c) marketable permits; better-defined property rights; pollution charges. ( d) pollution charges; extended property rights; marketable permits.Question 3 (1 point) A pollution charge gives the trucking industry an incentive to reduce its emissions, as long as the of reducing the emissions is ( a) total cost; equal to the social cost b) total cost; less than the tax O c) marginal cost; less than the tax d) marginal cost; equal to the social costQuestion 4 (1 point) To be effective, U.S. command-and-control environmental regulation required O a) social costs of industrial pollution to become unavoidable business costs. O b) firms to take the social costs of pollution into account. (c) firms to increase their costs by installing specified anti-pollution equipment. O d) the EPA to oversee all environmental laws and all of the above.Question 5 (1 point) A drug company is deciding how much to invest in Research and Development into finding a cure stomach cancer. The table below shows the company's demand for financial capital for R&D of this drug, based on its expected rates of return from selling the drug. Every investment has an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. Estimated Rate of Return | Value of R&D Projects That Provide at Least This High a Private Rate of Return to the Drug Company (measured in millions of dollars) 10% $220 9% $228 8% $238 79% $250 6% $264 5% $280 4% $298 3% $308If the opportunity cost of financial capital for the drug company falls from 7% to 5%, the drug company will invest more in R&D if it receives only the private benefits of this investment. O a) $24 O b) $30 c) $16 O d) $14Question 6 (1 point) Some studies done by economists have found that the original inventor receives from innovations, while other businesses and new product users receive the rest of the benefit. (a) one-quarter to one-half of the social and economic benefits O b) one-quarter to one-third of the total economic benefits ( c) one-quarter to one-third of social and economic benefits ( d) one-third to one-half of the total economic benefitsQuestion 7 (1 point) Once it's patent application has been accepted, a firm is able to earn on its product, which (a) competitive profits; creates incentive for continuing innovative R&D projects (b) more profit; will allow it to recover the biggest slice of the social value created ( c) monopoly profits; offers an incentive for research and development to take place (d) an increased rate of return for investors; raises doubts further R&D activitiesQuestion 8 (1 point) One reason some economists doubt that patent protection encourages innovation is that economic studies show that inventors receive only of the total economic value of their inventions in countries that a) one-half to two-thirds; had existing patents O b) one-half to two-thirds; previously had few patents ( c) one-third to one-half; previously had no patents O d) one-third to one-half; already had patentsQuestion 9 (1 point) Which of the following circumstances would encourage I'MaPharmaCo. to increase research and development activities? a) a low rate of return is likely O b) cost of financial capital is high O c) cost of financial capital is low O d) patent term expires in 20 yearsQuestion 10 (1 point) A positive externality arises in a situation where a third party, outside the transaction, ( a) benefits from a market transaction by others. ( b) suffers from a market transaction by others. O c) pays a pollution tax to balance social costs. ( d) fails to allocate resources efficiently.Question 11 (1 point) include both the private costs incurred by firms and also costs incurred by third parties outside the production process. O a) Private costs b) Market costs O c) social costs O d) External costsQuestion 12 {1 point} Command-and-control regulation is a bod}.r of law that '~._ J a) fails to consider private costs of firms. Li l3} specifies allowable quantities of pollution. /'_'\\ Ls!" C} details which pollution-control technologies must be used. /'_'\\ Ls)" Cl) can include both I} and c. Question 13 (1 point) Market failure describes a situation in which the market itself in a way that balances social costs and benefits. O a) remains outside the transaction ( b) incurs the costs outside the production process c) avoids externalities ( d) fails to allocate resources efficientlyQuestion 14 (1 point) A highly innovative firm operating in a competitive market will usually have ( a) a lack of ability to earn reasonable profits. O b) some time before competitors catch up to its innovations. ( c) vast numbers of competitors catching up to its innovations. ( d) a permanent edge over its competitors.Question 15 (1 point) Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? ( a) to encourage a stream of invention that benefits the whole of society. (b) to encourage a stream of inventions that monetarily benefit the inventor. ( c) to help inventors earn higher rates of return O d) to help inventors earn reasonable returnsQuestion 16 (1 point) In the case of technology, it can sometimes be quite difficult for to earn a rate of return from their inventions. a) individuals; high O b) public investors; low O c) private investors; reasonable O d) the whole of society; highQuestion 1? {1 point} Generally, market competition and technology can ./-_-\\ "\\___/:' a} support each other. /- -\\I II ':\\._./ b} oppose each other. ./-_-\\ "\\___/" C} compliment each other. ./-_-\\ "\\___/:' d) sometimes a or b. Question 18 (1 point) I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, (J a) it would receive a government bailout if losses could drive it out of business. ( b) it will enjoy a small temporary advantage over the competition. ( c) it could sell the new computers as a monopoly for at least a few years. ( d) it would be able to set price to compensate for development costs.Question 19 (1 point) Which of the following would most likely be recognized as a defining characteristic of a public good? O a) the good is nonrivalrous item b) the good is nonexcludable item O c) the good is both a and b above ( d) the good is a separate and identifiable itemQuestion 20 (1 point) A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms ( a) the option to fund all R&D projects through colleges or universities. O b ) assurance that antitrust authorities challenge cooperative R&D efforts. ( c) a permanent monopoly over all their inventions that never expires. ( d) a reduction in corporate taxes based on amount of R&D performed.Question 21 (1 point) When a government establishes a marketable permit program to address environmental pollution, it is actually issuing a form of a) pollution tax. ( b) command-and-control regulation. O c) inflexible, costly regulation. O d) permit to pollute.Question 22 (1 point) In circumstances involving millions of emitters of small amounts of pollution who have no strong interest in trading, will typically offer a better choice for achieving desired reductions of environmental pollution levels. J a) pollution charges O b) ecotourism ( c) enhanced property rights O d) marketable permitsQuestion 23 (1 point) Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the and the ( a) social costs are greatest; environmental benefits are least ( b) environmental benefits are greatest; social costs are least ( c) marginal benefits are greatest; marginal costs are least O d) marginal benefits are least; marginal costs are greatestQuestion 24 (1 point) Market-oriented environmental policies are and will work better in some situations than in others. a) a tool-kit; specific tools b) productive policies; some policies O c) flexible; the command-and-control approach ( d) inflexible; incentives to protect endangered speciesQuestion 25 (1 point) Marketable permits work best when there are permit holders who are highly interested in trading. a) less than a hundred ( b) a few dozen or a few hundred ( c) several dozen or a several hundred d) more than a thousand