6. Products that generate external costs are generally _____ or _____. A. over-produced; over-consumed B. under-produced;...
6. Products that generate external costs are generally _____ or _____.
| A. | over-produced; over-consumed |
| B. | under-produced; under-consumed |
| C. | well known; frequently ignored |
| D. | given attention; government regulated |
7. Public goods are _____ and _____.
| A. | nongeneric; very frequent |
| B. | neither helpful; not strategic |
| C. | nonrival; nonexcludable |
| D. | very common; very dependable |
8. A nonrival good is one for which:
| A. | one person’s consumption of the good does not diminish another person’s enjoyment of the good. |
| B. | once the good is provided no one can be prevented from enjoying the good. |
| C. | various goods do not compete with each other for success in the marketplace. |
| D. | firms manufacturing competitors of the good in question help to improve the good. |
9. “Nonexcludable” means that:
| A. | a good has all important product features bundled with the product. |
| B. | a good is available to very few consumers through very exclusive outlets. |
| C. | once a good is provided, no one can be prevented from enjoying it. |
| D. | no firms can be prevented from manufacturing a good. |
10. Common property resources tend to be exploited quickly because:
| A. | the resource is very attractive compared to available alternatives. |
| B. | it is not possible to prevent someone from using the resource. |
| C. | all such resources are commonly held through the government. |
| D. | consumers want to buy what other consumers have bought so they can have something in common with others. |
Homework Answers
Answer : 6) The answer is option A.
When the product is over-produced or over-consumed then external cost occur. Because socially optimal output level is that output level where social marginal benefit = social marginal cost. But when social marginal benefit = private marginal cost at output level then external cost occur. Therefore, option A is correct.
7) The answer is option C.
Public good has two characteristics. These are : (I) non-rival, and (II) non-excludable. Therefore, option C is correct.
8)The answer is option A.
In case of non-rival good one person's consumption does not decrease the consumption and enjoyment of other person. Therefore, option A is correct.
9) The answer is option C.
In case of non-excludable good everyone enjoy the good. No one can prevent the enjoyment of that good. Therefore, option C is correct.
10) The answer is option B.
In case of common property resources everyone use the resource. No one can prevent another person's use of that resource. Therefore, option B is correct.
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