AP Micro Unit 6 Review

Why are antitrust laws used by governments?

• To prevent inequality between the rich and the poor

• To prevent a company from using dangerous and untested products

• To prevent monopolies from forming and to ensure fair market standards

• To prevent corruption and government officials being bribed by lobbyists

A good that is excludable to other consumers and rivals is known as a

• public good

• quasi-public good

• positive externality

• private good

If a positive externality emerges in regard to the demand curve,

• MPB is not represented

• MPC is not represented

• MSC is represented

• None of the above

If the US government increases a tax to help redistribute income from the wealthy to the poor, it is following a

• Proportional tax system

• Progressive tax system

• Regressive tax system

• Neutral tax system

A negative externality will exist when

• All consumers receive an equal share of economic resources

• Spillover costs are given to others not directly involved in the consumption or production of a service

• The production of a good or service creates a spillover benefit

• There is a large unequal distribution of income in a society

The prive sector will NOT provide for a public good or service because of

• the income effect

• the interest rate effect

• the free-rider problem

• spillover costs

A positive externality will exist when

• All consumers receive an equal share of economic resources

• Spillover costs are given to others not directly involved in the consumption or production of a good or service

• The production of a good or service creates a spillover beneift

• Members of a community pay for a good or service while others do not yet benefit

If firms overproduce a good or service and charge a price that is too low, it is likely that

• A negative externality exists

• Spillover costs are subsidized by the government

• The firm is at the shutdown price

• All of the above

A coal company has had a record breaking quarter while operating in Indiana. Which of the following would be an example of a negative externality of production?

• The company deciding to hire additional employees

• The company's factories causing environmental harm

• The company paying higher taxes because of an additional revenue

• The company paying its suppliers more because of higher demand

Tera international has discovered a permanent vaccine for the common flu. The company filed a patent which grants it a natural monopoly for this product. What can the government do to ensure that Tera produces at the allocatively efficient quantity?

• Regulate a minimum amount of vaccines the company needs to provide

• Implement a per-unit tax

• Implement a lump-sum tax

• Provide a lump-sum subsidy