Microeconomics Test 4

Front 1

Means-tested program

Back 1

A program for which an individual has to be below a certain income level in order to qualify.

Front 2

Positive externalities lead to overproduction or underproduction?

Back 2

Underproduction

Front 3

Marketable permits

Back 3

Concepts such as carbon credits that are artificially created markets for the right to do certain things, such as pollute.

Front 4

Negative externality

Back 4

Costs from the production process that are not reflected in the market price and affect the welfare of others not necessarily using the product or service

Front 5

Positive externality

Back 5

Benefits from the production process that are not reflected in the market price and affect the welfare of others not necessarily using the product or service

Front 6

Assuming bargaining costs are low and that resource owners can identify the source of pollution and legally prevent damages, an efficient allocation can be reached independently of who is assigned the property rights; no government intervention is necessary

Back 6

Coase theorem

Front 7

Why are mergers good for handling negative externalities?

Back 7

if the polluter and the pollutee can merge into one firm, then the externality is said to be internalized. All of the decisions about how much to produce would be made within a single firm.

Front 8

Public responses to negative externalities

Back 8

Taxation of the polluter, subsidization of the polluter (in order for them to stop), environmental regulation, marketable permits

Front 9

How many pounds of garbage does each US resident produce per day?

Back 9

4 pounds.

Front 10

Marginal private cost (MPC)

Back 10

Private costs of production such as wages, costs of materials, rent, insurance, taxes, etc.

Front 11

Marginal External Cost (MEC)

Back 11

Valuation of marginal damage caused by negative externality

Front 12

Marginal Social Cost (MSC)

Back 12

MPC + MEC

Front 13

When more than one person can consume a good or service, it is said to be

Back 13

Nonrival

Front 14

In a direct, majority-rule vote,

Back 14

Only the median voter is completely satisfied

Front 15

All of the following are sources of negative externalities except one. Which is the exception?

Back 15

A solar water heater which is outside and obscures the view

Front 16

Open-access resources tend to be

Back 16

Overused

Front 17

Is the socially efficient price and level of output at the first or second intersection between D and MSC?

Back 17

First

Front 18

Is the market equilibrium price and level of output at the first or second intersection of D and MSC?

Back 18

Second

Front 19

Society's total cost of producing a good

Back 19

Includes all private and external costs

Front 20

If consumption of education creates a positive externality, then in order to increase efficiency relative to the outcome determined by private decisions, what must be done?

Back 20

More education must be produced.

Front 21

The U.S. Department of Agriculture defines the official poverty level as what?

Back 21

Income equal to three times the estimated cost of a nutritionally adequate diet

Front 22

Transfer programs that do not tie benefits to contributions are called what?

Back 22

Income assistance programs

Front 23

Which of the following is a social insurance program: Medicaid, food stamps, unemployment comp, TANF, or general assistance?

Back 23

Unemployment compensation.

Front 24

The socially efficient production level is where what two lines meet?

Back 24

S and MSB

Front 25

Coase's theorem states, practically, that what should be done in the case of an externality?

Back 25

The lowest cost remedy should be taken, regardless of responsibility or fault.

Front 26

A pure public good is what?

Back 26

Nonrival and nonexcludable

Front 27

When consumption of a good or service produces benefits or costs that are not reflected in the market price for the good, this is known as a(n) what?

Back 27

Externality

Front 28

If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost, what is happening?

Back 28

The good produces a negative externality.

Front 29

A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Who will create pollution?

Back 29

The pollution will be created by those most willing and able to pay for the right to pollute.

Front 30

When consumption of a good creates positive externalities, what happens?

Back 30

The private demand curve is below the marginal social benefit curve.

Front 31

Transfer programs that do not tie benefits to contributions are called what?

Back 31

Income assistance programs

Front 32

Income assistance programs include what two types of programs?

Back 32

Cash and in-kind transfer programs

Front 33

The poverty rate of the elderly in the United States has done what since 1959?

Back 33

It has fallen since 1959 because of the growth in Social Security and Medicare programs.

Front 34

One effect of the work requirements of welfare reform has been that what was done to welfare?

Back 34

It has raised the "price" of welfare to the recipients