Question

17. Marginal social cost is the

a. price a consumer pays for one more unit of a good.

b. cost a producer incurs producing one more unit of a good.

c. cost of producing one more unit of a good that falls on someone other than the producer.

d. sum of the cost a producer incurs from producing one more unit of a good plus the cost of producing one more unit of a good that falls on someone other than the producer.

23. A good is nonrival if ---; a good is nonexcludable if ----.       

a. only the government can produce it; you pay for the good, you are guarantee the benefits from the good.

b. nobody can be excluded from enjoying the benefits of the good; you consume a good, there is less for other people to consume.

c. you pay for the good, you are guaranteed to be the sole consumer; only government can produce the good..

d. when you consume a unit, you have not decreased the amount left for consumption by other people; nobody can be excluded from enjoying the benefit of the good.

29.  Why are private firms unable to produce public goods?

a. They can produce these goods but the government outlaws private firms from producing them.

b. The marginal cost of production is too high for private production to be possible.

c. They can produce these goods but they would not earn any revenue because of the free-rider problem.

d. None of the above answers is correct.

37   In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a short-run decision a perfectly competitive firm makes?

a. the profit-maximizing level of output

b. how much to spend on advertising and sales promotion

c what price to charge buyers for the product

d. whether or not to enter or exit an industry

Answer 1

17. d

Marginal social cost is the sum of the cost a producer incurs from producing one more unit of a good plus the cost of producing one more unit of a good that falls on someone other than the producer. It includes both the marginal private cost and the marginal external cost.

23. d

A good is non-rival if when you consume a unit, you have not decreased the amount left for consumption by other people ; a good is non-excludable if nobody can be excluded from enjoying the benefit of the good. These goods are commonly known as public goods.

29. c

Private firms are unable to produce public goods because although they can produce these goods but they would not earn any revenue because of the free-rider problem.  

37. a

In the short run the firm uses only one fixed input and incurs fixed costs of production. Thus, the firm seeks the quantity of output that will maximize the profit levels.