62) If negative externalities exist, then in a market with no property rights,

A) MSC = MSB.
B) MSC < MSB.
C) MSC > MSB.
D) MSC = marginal external cost.
E) none of the above.
63) When the government issues marketable permits
A) each firm buys or sells permits until its marginal benefit from polluting equals the market
price of a permit.
B) firms that have a low marginal cost of reducing pollution sell their permits, and firms that
have a high marginal cost of reducing pollution buy permits.
C) the incentive to pollute is greater than when the government sets emission charges.
D) the price at which firms buy and sell permits is set by the government.
E) firms that have a high marginal cost of reducing pollution sell their permits, and firms that
have a low marginal cost of reducing pollution buy permits.

64) A public good is

A) nonrival and nonexcludable.
B) produced by monopolies.
C) rival and excludable.
D) rival and nonexcludable.
E) nonrival and excludable.

65) Private goods are

A) nonrival and excludable.
B) nonrival and nonexcludable.
C) always produced in a non-regulated market.
D) rival and excludable.
E) rival and nonexcludable.

66) If a good is a public good,

A) anyone can be excluded from enjoying its benefits.
B) no one can be excluded from enjoying its benefits.
C) consumers must pay a high price to enjoy its benefits.
D) consumers pay a low price.
E) economies of scale exist over the entire range of output for which there is a demand.

67) An economy's marginal social benefit curve for a private good is obtained by summing the
individual marginal
A) cost curves horizontally.
B) cost curves vertically.
C) benefit curves horizontally.
D) benefit curves vertically.
E) benefit curves diagonally.

68) Free riding can occur if a good is

A) excludable and rival.
B) excludable and nonrival.
C) a private good.
D) nonexcludable and rival.
E) nonexcludable and nonrival.

69) Private provision of public goods

A) fails because the private firm will always go broke.
B) succeeds because public provision is often more costly.
C) succeeds if consumers expect to obtain a benefit from the consumption of the public good.
D) fails because of the free-rider problem.
E) fails because private firms generally charge higher prices than public firms, and therefore lose
customers.

70) The four factors of production are

A) productive factors, neutral factors, entrepreneurial factors, and nonproductive factors.
B) men, women, animals, and children.
C) labour, capital, entrepreneurship, and land.
D) machines, factories, buildings, and farms.
E) labour, money, profits, and land.

71) Natural resources that are depleted as they are used

A) should not be used.
B) are called nonrenewable natural resources.
C) should be used for only highly valued purposes.
D) should be conserved for future generations.
E) are called renewable natural resources.

72) To maximize profit, a firm hires labour until

A) there is no more labour available at the market wage rate.
B) they can sell that labour for no more than what they paid for it.
C) the wage rate paid to the labour equals the marginal cost of production.
D) the additional benefit of hiring the labour is equal to the additional revenue the labour
generates.
E) the value of marginal product equals the wage rate.

73) The value of marginal product of labour is the revenue

A) generated by selling an additional unit of output.
B) needed to hire an additional unit of labour.
C) generated by the employment of an additional unit of labour.
D) needed to cover the cost of producing an additional unit of output.
E) generated to cover the cost of hiring an extra unit of labour.

74) If marginal product of a restaurant employee is 10 customers per hour, and the price of a
meal is $15, the restaurant employee's value of marginal product is
A) $15.
B) $7.5.
C) $12.5.
D) $10.
E) $150.

75) If the price of the firm's output decreases, the value of marginal product curve
A) remains unchanged.
B) becomes more elastic.
C) becomes more inelastic.
D) shifts to the left.
E) shifts to the right.