Podcast
Questions and Answers
Which of the following best defines a normative economic principle?
Which of the following best defines a normative economic principle?
- A principle that measures economic welfare
- A principle that predicts how people will behave
- A principle that assesses market efficiency
- A principle that says how people should behave (correct)
What does welfare economics study?
What does welfare economics study?
- How equilibrium in the market maximizes total welfare
- How buyers and sellers benefit from participating in the market
- How the supply and demand curves relate to consumer and producer surplus
- How the allocation of resources affects economic wellbeing (correct)
How is consumer surplus measured using the demand curve?
How is consumer surplus measured using the demand curve?
- The area below the demand curve and above the price (correct)
- The difference between the amount a seller is paid and the seller's cost
- The difference between the maximum amount a buyer will pay and the amount the buyer actually pays
- The area above the demand curve and below the price
Which of the following is an advantage of standards over market-based instruments?
Which of the following is an advantage of standards over market-based instruments?
What is a disadvantage of standards compared to market-based instruments?
What is a disadvantage of standards compared to market-based instruments?
What do tradable pollution permits combine?
What do tradable pollution permits combine?
According to the text, what does the area below the price and above the supply curve measure in a market?
According to the text, what does the area below the price and above the supply curve measure in a market?
What kind of allocation would a fictional benevolent social planner choose to maximize society's well-being?
What kind of allocation would a fictional benevolent social planner choose to maximize society's well-being?
What does the equilibrium allocation in a perfectly competitive market achieve?
What does the equilibrium allocation in a perfectly competitive market achieve?
What conditions must be satisfied for the equilibrium outcome to be an efficient allocation?
What conditions must be satisfied for the equilibrium outcome to be an efficient allocation?
Which of the following is true about the social optimum in the presence of a negative externality?
Which of the following is true about the social optimum in the presence of a negative externality?
What is the effect of a positive externality in consumption?
What is the effect of a positive externality in consumption?
What is true about the market equilibrium in the presence of a positive externality?
What is true about the market equilibrium in the presence of a positive externality?
What is one way to deal with positive externalities in consumption?
What is one way to deal with positive externalities in consumption?
According to welfare economics, what does consumer surplus measure in a market?
According to welfare economics, what does consumer surplus measure in a market?
What does producer surplus measure in a market?
What does producer surplus measure in a market?
What does the area below the demand curve and above the price measure in a market?
What does the area below the demand curve and above the price measure in a market?
Which of the following is a disadvantage of standards compared to market-based instruments?
Which of the following is a disadvantage of standards compared to market-based instruments?
What do tradable pollution permits combine?
What do tradable pollution permits combine?
What is the effect of a positive externality in consumption?
What is the effect of a positive externality in consumption?
According to the text, what does the area below the price and above the supply curve measure in a market?
According to the text, what does the area below the price and above the supply curve measure in a market?
What kind of an allocation would a fictional benevolent social planner choose to maximize society's well-being?
What kind of an allocation would a fictional benevolent social planner choose to maximize society's well-being?
What allocation is chosen in a competitive market?
What allocation is chosen in a competitive market?
What is the effect of a negative externality in production?
What is the effect of a negative externality in production?
Which of the following is true about the social optimum in the presence of a positive externality?
Which of the following is true about the social optimum in the presence of a positive externality?
What is one way to deal with negative externalities in production?
What is one way to deal with negative externalities in production?
What is one way to deal with positive externalities in consumption?
What is one way to deal with positive externalities in consumption?
What is the command-and-control approach in environmental policy?
What is the command-and-control approach in environmental policy?
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