pf part 2 chapter 2

In the case of a negative externality, the social marginal cost will

• A.Exceed the private marginal cost.

• Be equal to private marginal cost

• A.Fall short of private marginal cost.

• A.Bear no significant relation to private marginal cost.

Each of the following provides incentives to reduce a negative externality except:

• A.A merger with affected firms.

• A.Subsidizing consumption of the good being produced.

• A.Bargaining among firms.

• A.Taxation of the externality.

3-An externality is defined as

• A.An additional cost imposed by the government on producers.

• A cost or benefit generated outside of the market transaction

• A.An additional gain received by consumers from decisions made by the government.

• The additional amount consumers have to pay to consume an additional amount of a good or service

4-All the following sentences describe education except:

• A.Public Good

• A.Have characteristics of private goods

• A.Have negative externality

• A.Have widely ranging externality

5-Exclusion is difficult to be applied on education

• true

• false

6-Marginal cost of educating additional student is…………

• A.Zero

• A.Not equal zero

• A.Negative Value

• A.Can’t be calculated

7-Education is ……………. Up to a certain level because it have……………

• A.Compulsory – Negative Externality

• A.Compulsory – Positive Externality

• A.Optional – Negative Externality

• A.Optional – Positive Externality

8-Providing education only in the competitive markets is for the good of the children

• true

• false

9-Not all the students in the society receive equal education, because education have characteristics of…………….

• A.Private goods

• A.Public goods

• A.Both public and private

• A.Neither public nor private

10-Principle of Maximum Social Advantage states that benefit of ………… of expenditures equal to the marginal disutility of …………….

• A.Marginal Utility – Expenditures

• A.Marginal disutility – Market force

• A.Marginal Utility – Taxation

• A.Marginal disutility - Taxation