Lesson 4 Quiz over Chapter 13 Flashcards Preview

Macroeconomics Mid-Term Exam 1st Half > Lesson 4 Quiz over Chapter 13 > Flashcards

Flashcards in Lesson 4 Quiz over Chapter 13 Deck (10):
1

An example of a public good is:

fire and police protection.

2

Inefficient outcomes may occur when demand curves do not reflect the total social benefit of producing a good or service.
True or False?

True

3

Which of the following could be considered a shortcoming of the market system?

The market demand curve does not always reflect the positive externalities of the good or service.

4

An external cost or external benefit is also known as a(n):

externality.

5

Intellectual property:

the body of law including patents, trademarks and copyrights that protect the right of inventors.

6

When externalities cause substantial positive benefits for third parties, a competitive market:

underallocates resources to the production of the good.

7

Positive externalities refer to:

benefits that spillover to a third party or parties.

8

One approach to positive externalities is for the government to levy taxes on the related good or service.
True or False?

False
they should decrease the tax on the good or service not increase it.

9

The optimal output of product with a positive externality occurs when marginal society's benefit and marginal society's cost of producing that externality are equal (MSC=MSB).
True or False?

True

10

Rivalry and excludability are the main characteristics of:

private goods.