Marginal social cost is equal to
a. total private cost
b. marginal private cost
c. marginal external cost
d. marginal private cost plus marginal external cost
e. marginal private cost divided by marginal external cost
QUESTION 2As the price of land decreases along its demand curve, the relative price of land
a. increases because the prices of other resources have also decreased
b. decreases because the prices of other resources have also decreased
c. increases because the prices of other resources have increased
d. decreases because the prices of other resources are held constant
e. remains constant because the prices of other resources also increase
QUESTION 3When the free market produces less than the socially optimal quantity of a good,
a. negative externalities must be present
b. marginal social cost must exceed marginal private cost
c. marginal private benefit must exceed marginal social benefit
d. the government should tax production of the good
e. there has been a market failure
QUESTION 4What is true along the demand curve for a resource?
a. Prices of other resources are assumed constant.
b. The marginal product of that resource remains constant.
c. Total cost of production is assumed constant.
d. The price of that particular resource is assumed constant.
e. The quantity of that particular resource is assumed constant.
QUESTION 5When competitive market equilibrium determines a level of output for which the marginal social cost exceeds the marginal social benefit, the private equilibrium results in
a. a positive externality
b. a Coase equilibrium
c. underproduction of the product
d. a market failure
e. external benefits
QUESTION 6As the price of a resource (e.g., labor) decreases,
a. demand for that resource increases
b. the quantity demanded of that resource decreases
c. the supply of that resource increases
d. producers are more willing and able to hire that resource
e. producers are less willing and able to hire that resource
QUESTION 7Marginal external costs are
a. additional unpriced costs imposed on society by producing one more unit of a good
b. the cost of damaged goods
c. the additional cost of imported goods
d. the total cost to society of producing a good
e. the marginal cost divided by the marginal revenue
QUESTION 8In the resource market, firms demand resources in order to
a. maximize profit
b. maximize total revenue
c. maximize marginal revenue
d. maximize utility
e. minimize cost
Quick Reply
