Macroeconomics Answers

QUESTION 21

Economists value a human life on the basis of studies of the value that people:

1. Actually place on human lives in their own decisions.
2. Actually place on human lives in other’s decisions.
3. Actually place on animals’ lives.
4. Actually place on their spare time.
5. Actually place on their property.

QUESTION 22

Findings suggest that any regulation that costs more than fifty million dollars per life saved:

1. Actually saves lives.
2. Has no impact on people’s lives.
3. Actually costs lives rather than saving them.
4. Is too much for our budget to handle.
5. Are beneficial to society.

QUESTION 23

No nation can by itself reduce emissions of carbon dioxide and other gasses:

1. Unless they are a poor nation.
2. If they are a poor nation.
3. By enough to solve the problem of global warming.
4. By enough to slow down global warming.
5. Unless the rest of the world agrees to do the same.

QUESTION 18

Because some environmental regulations have had benefits much higher than costs:

1. Does not prove that every individual regulation is a sensible idea.
2. Proves that every individual regulation is a sensible idea.
3. Means that more regulations would be beneficial to society.
4. Means that more regulations will be harmful to society.
5. All of the above. 

QUESTION 19

A substantial expansion of both rhino and elephant populations is broadly credited to:

1. Producers of pollution.
2. Consumers of pollution.
3. The military.
4. Ecotourism.
5. Economists.
6. Ethnocentrists.

QUESTION 20

The marginal costs of reducing pollution are generally:

1. Irrelevant.
2. Unknowable.
3. Substantial.
4. Decreasing.
5. Increasing.

QUESTION 16

The advantage of market-oriented environmental tools is:

1. That they reduce pollution by more than other methods.
2. That they reduce pollution by less than the other methods.
3. That they can achieve any desired reduction in pollution at a lower cost to society.
4. That they can achieve any desired reduction in pollution at a higher cost to society.
5. All of the above.

QUESTION 17

A more recent study estimated that the environmental benefits to Americans of the Clean Air Act:

1. Will exceed their costs by a margin of one to four.
2. Will exceed their costs by a margin of four to one.
3. Will exceed their costs by a margin of ten to one.
4. Will exceed their costs by a margin of 200 to one.
5. Will not be worth the costs of implementation.  

QUESTION 13

A pollution charge gives a profit-maximizing firm an incentive to:

1. Work harder.
2. Hire more workers.
3. Hire fewer workers.
4. Determine ways to reduce its emissions.
5. Determine ways to increase its emissions.

QUESTION 14

Compared with a command-and-control regulation, a pollution tax:

1. Actually increases pollution.
2. Reduces pollution in a more flexible, expensive way.
3. Reduces pollution in a less flexible, cheaper way.
4. Reduces pollution in a more flexible, cheaper way.
5. Wins more hearts. 

QUESTION 15

Buying and selling the marketable pollution permits will determine:

1. Exactly which firms reduce pollution and by how much.
2. Exactly which firms reduce pollution, but has no impact on the amount.
3. The amount of pollution reduction, but cannot allocate the reduction between firms.
4. Which consumers benefit.
5. How much tax revenue the government will collect.

QUESTION 9

When the externality of pollution exists:

1. The supply curve no longer represents all social costs.
2. The supply curve continues to represent all social costs.
3. Everybody benefits.
4. Nobody benefits.
5. Society benefits.

QUESTION 10

Economists commonly refer to externalities as an example of:

1. Too many chefs, not enough cooks.
2. In for a penny, in for a pound.
3. A pound of flesh.
4. The aphorism of the apocalypse.
5. Market failure.

QUESTION 11

Command-and-control regulation requires that firms increase their costs:

1. At the expense of society.
2. By installing anti-pollution equipment.
3. By polluting more.
4. By increasing their level of production.
5. All of the above.

QUESTION 12

Command-and-control regulation is inflexible; it usually

1. Requires different standards for all polluters.
2. Requires the same standard for all polluters.
3. Will not bend to consumer preferences.
4. Will reach the worst possible outcome.
5. Cannot even touch its toes.

QUESTION 5

In a market with no anti-pollution restrictions, firms:

1. Cannot exist.
2. Can dispose of certain wastes only by paying an appropriate tax.
3. Can dispose of certain wastes only by paying an inappropriate tax.
4. Can dispose of certain wastes absolutely free.
5. Cannot dispose of wastes.

QUESTION 6

Taking the additional external costs of pollution into account results in:

1. A lower quantity of production.
2. A lower quantity of pollution.
3. A higher price.
4. All of the above.
5. None of the above.

QUESTION 7

The supply curve is based on choices about production that firms make while:

1. Looking at their marginal costs.
2. Looking at their fixed costs.
3. Looking at their total costs.
4. Looking at their implicit costs.
5. None of the above. 

QUESTION 8

The demand curve is based on the benefits that individuals perceive while:

1. Watching the ballgame.
2. Maximizing their utility.
3. Minimizing their utility.
4. Maximizing their profit.
5. Minimizing their profit.

QUESTION 1

The subject of this chapter is:

1. How to have our cake and eat it too.
2. How to balance economic progress with unintended effects on our planet.
3. How to bake a cake.
4. How to fry eggs.
5. How to sleep properly. 

QUESTION 2

Every country needs to strike some balance between:

1. Production and environmental quality.
2. Production and additional jobs.
3. Production and additional wealth.
4. Production and profusion.
5. All of the above.  

QUESTION 3

This is a fundamental building block of the economic way of thinking:

1. Trade allows wealthy countries to take advantage of poorer countries.
2. Trade allows poorer countries to take advantage of richer countries.
3. Voluntary exchange benefits both buyers and sellers.
4. Voluntary exchange benefits only buyers.
5. Voluntary exchange benefits only sellers.

QUESTION 4

The social costs include the private costs of production that a company incurs:

1. But none of the external costs.
2. And the external costs.
3. Without addressing the problem.
4. While addressing the problem.
5. All of the above.

If the demand function faced by a firm is:

Q = 90 – 2P

TC = 2 + 57Q – 8Q² + Q³

Determine the level of output at which the firm maximizes the profit.

Determine the best level of output for the above question by the MR and MC approach.

Suppose that the production function of the firm is:

Q = 100L^1/2.K^1/2

 K= 100, P = $1, w = $50 and r = $40. Determine the quantity of labor that the firm should hire in order to maximize the profits. What is the maximum profit of this firm?

Question 16: Given 120 + 50Q – 10Q² + Q³

Find

a.      The equations of the TVC, AVC, and MC functions.

b.     The level of output at which AVC and MC are minimum, and prove that the AVC and MC curves are U-shaped.

c.      Find the AVC and MC for the level of output at which the AVC curve is minimum.