Liberty University ECON 213 Quiz 6 Complete Solutions Correct Answers Key

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Liberty University ECON 213Quiz 6Complete Solutions Correct Answers KeyTwo versionsQuestion 1 Refer to the accompanying figure, which shows the market for fish, to answer thequestions that follow. If the government sets a quota of 300 pounds of fish caught per day, thenfish will sell for __________ more per pound than the cost of catching the fish.Question 2 The tragedy of the commons occurs because the good being produced is:Question 3 The government has identified a situation where the production of a good is creatinga negative externality. The government should enact legislation to require firms to internalize theexternality:Question 4 Which of the following characteristics best defines a public good?Question 5 The market works efficiently in the absence of externalities if the good is:Question 6 Visiting the public beach during summer is an example of an activity that is:Question 7 Copyright laws exist to:Question 8 The marketoverproduces commonresource goods because private decisionmakersconsider __________ costs but society experiences __________ costs.Question 9 Which of the following characteristics best defines a private good?Question 10 Your neighbor is an avid gardener who changes his flower displays four times peryear and who was given the “best yard on the block” award last year. While you personally enjoythese changing flower displays, some of your neighbors have said they do not like some of theflowers your neighbor chooses to plant. For you, this is an example of:Question 11 The ability to download music and movies from the Internet without paying is:Question 12 Consider the following scenario when answering the questions that follow: Jonesowns a factory that is dumping toxic waste into a river where Smith owns a resort. At present,Jones is not filtering the water that he dumps into the river. There is a filter he could install thatwould remove a significant amount of the toxic elements from the water before it is dumped inthe river. Jones and Smith have each assessed the situation and come up with the following data:If property rights over the river are assigned to Jones, then:

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Question13Refertotheaccompanyingfigure.Whenanegativeexternalityexistsandthegovernment does not intervene, which point best identifies the market equilibrium?Question 14 It is best to reduce the level of pollution:Question 15 To reduce the level of pollution emitted by firms in an industry, the governmentcould use a capandtrade policy or a carbon tax. Which of the following is true?Question 16 Which rule would not protect fish populations?Question 17 The costs of a market activity paid for by an individual NOT engaged in the marketactivity are:Question 18 The city decides to offer a subsidy to each homeowner’s association that plants moreflowers in their common areas. In the market for flowers, this will cause the:Question 19 Which good has welldefined property rights?Question20Ifthegovernmentdecidestoadoptacarbontax,thepriceofgoodswhoseproduction generates carbon emissions will __________ and the quantity produced will __________.Version 2Question 1 Refer to the following scenario to answer the questions that follow. Five fishermen livein a village and have no other employment or incomeearning possibilities besides fishing. Theyeach own a boat that is suitable for fishing but does not have any resale value. Fish are worth $5per pound, and the marginal cost of operating the boat is $500 per month. They all fish a rivernext to the village. According to the following schedule, they have determined that, when thereare more of them out on the river fishing, they each catch fewer fish per month. If four boatsoperate, then each boat will make a profit of:Question 2 Refer to the accompanying figure, which shows the market for fish, to answer thequestions that follow. If the government sets a quota of 300 pounds of fish caught per day andissues a license that entitles the holder to catch 20 pounds of fish per day, then the value of thelicense is:Question 3 If government regulation forces firms in an industry to internalize the externality, thenthe:

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Question 4 Consider the following scenario when answering the questions that follow: Jones ownsa factory that is dumping toxic waste into a river where Smith owns a resort. At present, Jones isnot filtering the water that he dumps into the river. There is a filter he could install that wouldremove a significant amount of the toxic elements from the water before it is dumped in the river.JonesandSmithhaveeachassessedthesituationandcomeupwiththefollowingdata:Ifproperty rights over the river are assigned to Jones, then:Question 5 Refer to the accompanying figure, which shows the market for fish, to answer thequestions that follow. If the government sets a quota of 300 pounds of fish caught per day, thenfish will sell for __________ more per pound than the cost of catching the fish.Question 6 Copyright laws exist to:Question 7 A good that is nonrival and excludable is defined as a:Question 8 Which of the following is the best definition of a capandtrade policy for pollution?Question 9 __________ can be jointly consumed by more than one person, and nonpayers aredifficult to exclude.Question 10 Refer to the following scenario to answer the questions that follow. Five fishermenlive in a village and have no other employment or incomeearning possibilities besides fishing.They each own a boat that is suitable for fishing but does not have any resale value. Fish areworth $5 per pound, and the marginal cost of operating the boat is $500 per month. They all fisha river next to the village. According to the following schedule, they have determined that, whenthere are more of them out on the river fishing, they each catch fewer fish per month. How manyfishermen will choose to operate their boats?Question 11 For a market to work efficiently:Question 12 A major reason why public goods are not supplied by the market is the:Question 13 Which of the following is true?Question 14 The ability to download music and movies from the Internet without paying is:Question 15 Externalities exist because:Question16Refertotheaccompanyingfigure.Whenanegativeexternalityexistsandthegovernment does not intervene, which point best identifies the market equilibrium?

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