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Question: 1 when the market quantity is the sociallyefficient quantity total...

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1. When the market quantity is the socially-efficient quantity, total willingness-to-pay will be a. True b. False 2. Public Goods are often supplied by governments because private firms have difficulty determining individuals true WTP for the good due to the problem of a. Adverse selection b. Moral hazard c. Non-exclusion d. Free-riding 3. When a market is in equilibrium, the market price reflects a. The marginal willingness to pay b. Both the MWTP and the MC c. The marginal cost d. None of the above 4. In the presence ofa positive extemality, the competitive market equilibrium output level wil be a. The socially efficient level of output b. Impossible to determine c. Less than the socially efficient level of output d. Greater than the socially efficient level of output 5. In the following figure, assuming no positive extemalities are present, the socially efficient level of output is equal to SC MPC+MEC MPC Demand b. Q2 c. d. None of these 6. Which of the following would not be an appropriate public policy to deal with the inefficiency created by common-property resources? a. Tax the use of the resource b. Establish industry quotas (limits to the use of the resource c. Subsidize the use ofthe resource d. Establish property rights to the resource 7. Common-property resources lead to inefficient outcomes because a. Decisions to consume the resource create external benefits b. The resource is non-rival c. Decisions to consume the resource often imposes costs on others d. None of the above

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