Oxford University Press - Online Resource Centres

King: Economics

Chapter 13

Instructions

Answer the following questions and then press 'Submit' to get your score.

Question 1

A drunken passenger on a train sets off the alarm for no good reason, and the train comes to a halt. There is then a long delay before it sets off again. This delights a small boy who enjoys the kerfuffle, but it irritates the other passengers and holds up a freight train behind. Which of the following externalities from consumption has the passenger not created?

Question 2

Suppose both the production and the consumption of a product generate externalities. At which of the following outputs would output be at the Pareto-efficient level.

Question 3

Suppose a large city has several power stations which all emit CO2. The government wants to reduce CO2 emissions, but knows that it will cost some power stations more than others to reduce their emissions. In order to secure the most reduction from the stations which would find it cheapest to cut back, which of the following policies would be best?

Question 4

Return to the city in the last question. Suppose the government wishes to reduce CO2 emissions but does not want to measure them. Which of the following policies would be best?

Question 5

Which of the following statements is true?

Question 6

Which of the following statements is true?
1.   A common resource is rival and non-excludable.
2.   A public good is non-rival and non-excludable.

Question 7

Consider a fishing ground. Which of the following statements is false?

Question 8

Which of the following problems may be caused by asymmetric information?
1.   It may lead to an adverse selection of used cars being offered for sale.
2.   It may lead to an adverse selection of borrowers applying for loans at a bank.
3.   It may lead to an adverse selection of drivers applying for comprehensive car insurance.

Question 9

Which of the following statements is false?

Question 10

Which of the following statements is false?