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61
Copyright © 2011 Pearson Education, Inc.
49) The figure above shows the market for a good with an external benefit. If the market is
competitive and the government takes no action, the equilibrium quantity is ________ units and
the equilibrium price is ________ per unit.
A) 8; $150
B) 8; $300
C) 10; $250
D) 10; $100
E) 10; $150
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: CD
AACSB: Analytical reasoning
50) The figure above shows the market for a good with an external benefit. If the market is
competitive and the government takes no action, the equilibrium quantity of ________ units is
inefficient because ________.
A) 8; marginal benefit exceeds marginal cost
B) 8; marginal cost exceeds marginal benefit
C) 10; marginal cost exceeds marginal benefit
D) 10; marginal social benefit exceeds marginal benefit
E) 10; marginal external benefit exceeds marginal social benefit
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: CD
AACSB: Analytical reasoning
62
Copyright © 2011 Pearson Education, Inc.
51) The figure above shows the market for a good with an external benefit. When 6 units are
produced, marginal social benefit equals ________ and marginal external benefit equals
________.
A) $200; $150
B) $350; $200
C) $200; $50
D) $350; $150
E) $150; $250
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: CD
AACSB: Analytical reasoning
52) The figure above shows the market for a good with an external benefit. The efficient level of
production is ________ units because ________.
A) 8; marginal benefit equals marginal cost
B) 8; marginal cost is less than marginal social benefit
C) 10; marginal cost equals marginal social benefit
D) 10; marginal social benefit exceeds marginal benefit
E) 8; marginal benefit equals the marginal external benefit
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: CD
AACSB: Analytical reasoning
53) The figure above shows the market for a good with an external benefit. If the government
wants to grant a subsidy so that the efficient quantity is produced, the subsidy must equal
________ per unit.
A) $100
B) $150
C) $250
D) $300
E) $50
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: MR
AACSB: Analytical reasoning
63
Copyright © 2011 Pearson Education, Inc.
54) The above figure shows the market for college education in the United States. With no
government intervention, the market equilibrium is at a tuition of ________ and ________
million students per year.
A) 16,000; 14
B) $20,000; 10
C) $13,000; 10
D) $13,000; 17
E) $16,000; 10
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
55) The above figure shows the market for college education in the United States. With no
government intervention, the unregulated market equilibrium is ________ because education
generates ________.
A) efficient; positive external benefits
B) inefficient; positive external benefits
C) inefficient; positive external costs
D) efficient; positive external costs
E) inefficient; public goods
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
64
Copyright © 2011 Pearson Education, Inc.
56) The figure above shows the market for college education in the United States. If there is no
external benefit from a college education and the government does not intervene in the market,
then the equilibrium tuition of college education is
A) $13,000.
B) $16,000.
C) $20,000.
D) $13,000.
E) $16,000.
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
57) The figure above shows the market for college education in the United States. The efficient
quantity of college education is ________ students per year.
A) 10 million
B) 12 million
C) 17 million
D) 18 million
E) 14 million
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
58) The figure above shows the market for college education in the United States. The marginal
external benefit associated with educating 14 million students is ________ per student per year.
A) $16,000
B) $13,000
C) $11,000
D) $5,000
E) $7,000
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
65
Copyright © 2011 Pearson Education, Inc.
59) The figure above shows the market for college education in the United States. If the
government does not intervene in this market, the number of students going to college is
________ and the efficient number of students is ________.
A) 13 million students per year; 16 million students per year
B) 14 million students per year; 16 million students per year
C) 10 million students per year; 14 million students per year
D) 10 million students per year; 13 million students per year
E) 14 million students per year; 10 million students per year
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
60) The figure above shows the market for college education in the United States. If the
government does not intervene in this market, the deadweight loss equals ________ per year.
A) $28 billion
B) $14 billion
C) $280 billion
D) $224 billion
E) $7 billion
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
61) The figure above shows the market for college education in the United States. If the
government intervenes in the market and provides a subsidy to colleges to enroll the efficient
number of students, the amount of the subsidy equals ________ per student.
A) $5,000
B) $16,000
C) $13,000
D) $11,000
E) $7,000
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
66
Copyright © 2011 Pearson Education, Inc.
62) The figure above shows the market for college education in the United States. If the
government provides a subsidy to colleges to enroll the efficient number of students, the amount
of the subsidy per student equals ________ and each student pays ________ per year.
A) $16,000; $13,000
B) $7,000; $13,000
C) $5,000; $13,000
D) $11,000; $16,000
E) $5,000; $11,000
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
63) The figure above shows the market for college education in the United States. If the
government has a goal of enrolling the efficient number of students each year, the government
should provide a voucher to students equaling ________.
A) $16,000
B) $13,000
C) $11,000
D) $5,000
E) $7,000
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: KG
AACSB: Analytical reasoning
67
Copyright © 2011 Pearson Education, Inc.
64) The figure above shows the market for education, a good possessing an external benefit. In
order to attain the efficient number of students, a government subsidy must equal ________ per
student.
A) $2,000
B) $8,000
C) $6,000
D) $10,000
E) $16,000
Skill: Level 4: Applying models
Section: Checkpoint 10.3
Author: PH
AACSB: Analytical reasoning
65) A voucher is
A) the production of a good by some public institution.
B) a payment that government makes to private producers.
C) a token that government provides to households to use in purchasing a specific good.
D) a permit to pollute.
E) a tax that is imposed on consumers rather than producers.
Skill: Level 1: Definition
Section: Checkpoint 10.3
Author: SB
AACSB: Reflective thinking
68
Copyright © 2011 Pearson Education, Inc.
66) Which of the following government actions is appropriate in a market with an external
benefit?
A) taxes
B) vouchers
C) marketable permits
D) setting a tax equal to the transactions costs
E) price ceiling
Skill: Level 2: Using definitions
Section: Checkpoint 10.3
Author: SB
AACSB: Reflective thinking
67) Some policymakers have proposed giving parents of children in poorly performing schools
tax dollars to help send their children to private schools. This proposal is an example of
A) vouchers.
B) public provision.
C) external costs.
D) taxes.
E) correcting an externality using a Coase good.
Skill: Level 2: Using definitions
Section: Checkpoint 10.3
Author: JC
AACSB: Reflective thinking
68) Pell grants are money given to students attending college. Pell grants are most closely similar
to
A) public provision of a good.
B) private subsidies given to producers of a good.
C) vouchers given to consumers of a good.
D) property rights assigned to consumers of a good.
E) a subsidy given to the producer of a good.
Skill: Level 4: Applying models
Section: Checkpoint 10.3
Author: TS
AACSB: Reflective thinking
69
Copyright © 2011 Pearson Education, Inc.
69) Food stamps provided by the government to households are an example of
A) vouchers.
B) marginal benefits from producing a good or service.
C) marginal cost from producing a good or service.
D) marginal external cost.
E) a Coasian good.
Skill: Level 1: Definition
Section: Checkpoint 10.3
Author: PH
AACSB: Reflective thinking
70) Vouchers given to consumers
A) increase the demand for a good.
B) decrease the demand for a good.
C) increase the supply of a good.
D) decrease the supply of a good.
E) increase both the demand for the good and the supply of the good.
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: SB
AACSB: Reflective thinking
71) The use of vouchers for education
A) decreases the demand for education and increases the equilibrium quantity.
B) increases the demand for education and increases the equilibrium quantity.
C) increases the deadweight loss for those who can't afford schooling.
D) decreases the quantity provided to the efficient level.
E) decreases the demand for education and decreases the equilibrium quantity.
Skill: Level 2: Using definitions
Section: Checkpoint 10.3
Author: WM
AACSB: Reflective thinking
70
Copyright © 2011 Pearson Education, Inc.
72) Education has an external benefit. So to achieve the efficient level of education, an education
voucher must equal the difference between the
A) marginal (private) cost and the marginal social benefit.
B) marginal (private) benefit and the marginal social benefit.
C) marginal social benefit and the marginal (private) cost.
D) dollar price and marginal (private) cost.
E) marginal (private) cost and the marginal social cost.
Skill: Level 2: Using definitions
Section: Checkpoint 10.3
Author: CD
AACSB: Reflective thinking
73) If vouchers for a good or service given to consumers, then the supply curve ________ and
the demand curve ________.
A) shifts leftward; shifts leftward
B) shifts leftward; shifts rightward
C) shifts rightward; shifts rightward
D) does not shift; shifts rightward
E) shifts rightward; does not shift
Skill: Level 3: Using models
Section: Checkpoint 10.3
Author: WM
AACSB: Analytical reasoning
