Chapter 3 Questions Economics

Topics: Externality, Market failure, Pigovian tax Pages: 2 (403 words) Published: February 4, 2015
Chapter 3 Multiple Choice
1. What is externality
a. Looking at a problem from an external view
b. A private behavior that has broader social consequences* pg 56 c. Weighing the costs and the benefits of a decision
d. F
2. Who deals with externalities in a market economy
a. The government* pg 56
b. Local businesses
c. Volunteers
d. Individuals
3. Which one of these can you have property rights on
a. House
b. Car
c. Inventions
d. All of the above* pg 66
4. What is the average cost of bringing a new drug to market a. $600 million* pg 68
b. $1 million
c. $50 million
d. $350 million
5. Which country has the highest rate of organ donations
a. United States
b. France
c. Germany
d. Spain* pg 79
6. In what year did Abdul Waheed’s case come to trial against his neighbor a. 2007
b. 2000* pg 71
c. 2001
d. 2003
7. Which of the following is not an example of a negative externality a. Buying a SUV
b. Not picking up your dog’s poop
c. The authors neighbor playing the bongos
d. A business investing in a downtrodden neighborhood* pg 58 8. What is the benefit that smokers provide to society
a. They pay high taxes
b. Second hand smoke
c. They die young* pg 59
d. Put more money into the economy
9. What reason does the author say is responsible for billions of people living in poverty a. Bad government* pg 65
b. Externality
c. Hunger
d. Drought
10. In 1999 what did Angola’s rulers spend $900 million dollars on a. Weapons* pg 66
b. Food
c. Cars
d. Space program
11. What was Napster sued for
a. Copyright infringement
b. Facilitating piracy* pg 66
c. Selling credit card information
d. Tax evasion
12. Jerry Jordan was the former president of what
a. The United States
b. Microsoft
c. Federal Reserve Bank of Cleveland* pg 70
d. The senate
Short Answer
1. Create an example of an externality?
2. What are the rules for a functional market economy?
3. Name three ways the government lowers the cost of doing business in the...
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