Question

10. Under conditions of monopolistic competition, a firm maximizes profits where

a. MR equals AR

b. MR = AVC

c. MR = ATC

d. MR equals MC

12. The benefit your neighbor enjoys without charge when you landscape your yard is an example of

a. how markets always achieve efficiency.

b. a positive externality.

c. how an externality has been internalized.

d. a negative externality.

15. Which of the following is an example of a negative externality?

a. emancipation park in Houston is too crowded to enjoy.

b. residents of a community located near chemical plants along houston's ship channel develop respiratory problems attributable to chemical emissions.

c. galveston bay sees its fishing population depleted by overfishing.

d. a community is vaccinated against the flu.

17. The cost of increased pollution control is

a. close to zero since there are offsetting health benefits.

b. higher prices for goods and services.

c. a reduction in the interest rate.

d. an increased rate of economic growth.

18. If a negative externality results from the mowing of lawns, the marginal cost of lawn mowing as seen by lawn mowing firms:

a. does not include the marginal external cost.

b. equals the marginal social cost.

c. includes the marginal external cost.

d. exceeds the marginal social cost.

Answer 1

10)

Answer: (d).

Profit is maximized where MR= MC.

12)

Answer: (b)

The positive externalities are the benefits of the consumption or production which are the faced by the third parties. .

15)

Answer: (b)

Negative externalities are caused by the emission by the chemical factories.

17)

Answer: (b)

The price of good and service will rise when regulatory mechanism is enforced.