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Question-1
Externalities, both negative and positive, are a cause for
(A)
Concern
(B)
Market failure
(C)
Full employment
(D)
Monopolistic competition
Question-2
All of the following statements are incorrect except:
(A)
When marginal social benefits are lower than marginal private benefits, output is at its optimal level
(B)
Loud music is an example of negative benefit externality
(C)
Marginal social benefits can never be larger than private social benefits
(D)
When marginal social benefits are greater than marginal private benefits, there is a negative externality
Question-3
According to Ronald Coase:
(A)
Governments should tax monopolistic supplier of durable goods
(B)
There is an ‘n’ shaped relationship between income inequality and GDP per capita
(C)
Additional greenhouse gases from developing economies can be balanced by a reduction in pollution from highly developed economies
(D)
A monopoly supplier of a durable good would sell all units of output at the perfectly competitive price
Question-4
An externality is an example of a market failure because:
(A)
A good can be consumed by many people without having to pay for it
(B)
The market is under-producing a good
(C)
The price of the product does not reflect all costs
(D)
The price does not fluctuate with supply and demand
Question-5
All of the following statements are correct except:
(A)
The total of consumer and producer surplus is higher under perfect competition than under monopoly
(B)
Under monopoly, the dead-weight loss is minimized
(C)
The consumer surplus under perfect competition is greater than under monopoly
(D)
The producer surplus is greater under monopoly than under perfect competition
Question-6
Externalities are a problem only if:
(A)
The externalities are negative
(B)
Decision makers do not take them into account
(C)
All firms are perfectly competitive
(D)
All firms are monopolistic
Question-7
The total cost to society of producing an additional unit of a good or service is the:
(A)
Marginal damage cost
(B)
Marginal social cost
(C)
Marginal external cost
(D)
Marginal private cost
Question-8
When you consume good Q, not only do you benefit from consuming the good, but other people benefit from your consumption as well. If firms produce good Q where P = MC, firms will be producing:
(A)
Less than the efficient level of output
(B)
The efficient level of output
(C)
More than the efficient level of output
(D)
So that consumer surplus is zero
Question-9
Which of the following would meet an economist's definition of a public good?
(A)
An elementary school
(B)
A hospital
(C)
A university
(D)
National defense
Question-10
All of the following statements are correct except:
(A)
When marginal social costs are greater than marginal private costs, there is a negative externality
(B)
When marginal social benefits are higher than marginal private benefits, governments should subsidize production
(C)
When marginal social costs are higher than marginal private costs, governments should tax production
(D)
When marginal private costs are equal to marginal private benefits, the level of output is socially optimal
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Cambridge Secondary Grade 9
IGCSE
Practice in Related Chapters
Competitive Markets Demand and Supply
The Foundations of Economics
Elasticities
Fundamental Concepts in Economics
The Theory of the Firms Production, Costs, Revenue and Profits
The Theory of the Firm II Market Structures
The Level of Over All Econonic Activity
Aggregate Demand and Aggregate Supply
Macroeconomic Objectives I : Low Unemployment,Low and Stable Rate of Inflation
Demand-Side and Supply-Side Policies
Government Intervention
Macro Economic Objectives II : Economic Growth and Equity in the Distribution of Income
Market Failure
International Trade
Exchange Rates and the Balance of Payments
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