UNIT 5

Question 1

what causes overproduction?

Answer 1

negative externalities

Question 2

what leads to positive externalities?

Answer 2

things like education

Question 3

what causes underproduction?

Answer 3

positive externalitilies

Question 3

what explains the relationship between quantity supplied and changes in price?

Answer 3

if the supply curve is relatively elastic, quantity supplied responds substantially to change in price.

Question 4

what explains the governments tax revenue?

Answer 4

the size of the tax times the amount of the good sold.

Question 5

what defines the marginal cost of public funds?

Answer 5

The Marginal Cost of Public Funds (MCPF) measures how much economic cost is incurred to raise one additional dollar of government revenue through taxation.

Question 6

what is general knowledge considered?

Answer 6

it is non excludable and not rival in consumption

Question 7

what is a command and control policy?

Answer 7

A command and control policy is a type of government regulation where the government:

Sets rules or standards (the “command”), and

Enforces them with penalties for non-compliance (the “control”).