Macroeconomics 21st Edition By McConnell – Test Bank
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Sample Questions
Chapter 04
Market Failures: Public Goods and Externalities
Multiple Choice
Questions
1.
Market failure is said to occur whenever
1. private
markets do not allocate resources in the most economically desirable
2. prices
3. some
consumers who want a good do not obtain it because the price is higher than
they are willing to
4. government
intervenes in the functioning of private
2. Market
failures
1. are
only a concern when they result in prices that are too
2. apply
exclusively to situations where private markets do not produce any of an
economically desirable
3. result
in overproduction or underproduction of a
4. result
from government interference in private
3. Which
of the following is an example of market failure?
1. negative
externalities
2. positive
externalities
3. public
goods
4. all
of these
4. Demand-side
market failures occur when
1. demand
curves don’t reflect consumers’ full willingness to pay for a good or
2. demand
curves don’t reflect the full cost of producing a good or
3. government
imposes a tax on a good or
4. a
good or service is not produced because no one wants
5. People
enjoy outdoor holiday lighting displays and would be willing to pay to see
these displays but can’t be made to Because those who put up lights are unable
to charge others to view them, they don’t put up as many lights as people would
like. This is an example of a
1. negative
2. supply-side
market
3. demand-side
market
4. government
6. Which
of the following is the best example of a supply-side market failure?
1. No
one provides street lights in a town because, once the lights are in operation,
people don’t have to pay to use
2. A
firm keeps its production costs down by dumping its waste in the nearby river,
adversely affecting water quality for residents in the
3. Government
imposes taxes on the production of a socially desirable
4. Street
performers don’t get full payment for the value of their output because
people watch and enjoy the shows without paying the
7. Supply-side
market failures occur when
1. supply
curves don’t reflect consumers’ full willingness to pay for a good or
2. supply
curves don’t reflect the full cost of producing a good or
3. government
regulates production of a good or
4. a
good or service is not supplied because no one wants
8. From
society’s perspective, in the presence of a supply-side market failure, the
last unit of a good produced typically
1. generates
more of a benefit than it costs to
2. produces
a benefit exactly equal to the cost of producing the last
3. maximizes
the net benefit to
4. costs
more to produce than it provides in
9. The
trains of the Transcontinental Railway Company, when shipping goods, sometimes
emit sparks that start fires along the tracks and damage the property of If
Transcontinental does not pay for the damage it causes, what has occurred?
1. positive
externality
2. demand-side
market failure
3. supply-side
market failure
4. all
of these
10. What
two conditions must hold for a competitive market to produce efficient
outcomes?
1. Demand
curves must reflect all costs of production, and supply curves must reflect
consumers’ full willingness to
2. Supply
curves must reflect all costs of production, and demand curves must reflect
consumers’ full willingness to
3. Firms
must minimize production costs, and consumers must minimize total
4. Firms
must maximize profits, and consumers must all pay prices equal to their maximum
willingness to
11. If
the demand curve reflects consumers’ full willingness to pay, and the supply
curve reflects all costs of production, then which of the following is true?
1. The
benefit surpluses shared between consumers and producers will be
2. The
benefit surpluses received by consumers and producers will be
3. There
will be no consumer or producer
4. Consumer
surplus will be maximized, and producer surplus will be
12. Consumer
surplus
1. is
the difference between the maximum prices consumers are willing to pay for a
product and the lower equilibrium
2. is
the difference between the maximum prices consumers are willing to pay for a
product and the minimum prices producers are willing to
3. is
the difference between the minimum prices producers are willing to accept for a
product and the higher equilibrium
4. rises
as equilibrium price
13. Producer
surplus is the difference between
1. the
maximum prices consumers are willing to pay for a product and the lower
equilibrium
2. the
quantity supplied and quantity demanded at an above equilibrium
3. the
minimum prices producers are willing to accept for a product and the higher
equilibrium
4. the
maximum prices consumers are willing to pay for a product and the minimum
prices producers are willing to
14. Jennifer
buys a piece of costume jewelry for $33, for which she was willing to pay $42.
The minimum acceptable price to the seller, Nathan, was $30. Jennifer
experiences
3. a
consumer surplus of $12, and Nathan experiences a producer surplus of $3.
4. a
producer surplus of $9, and Nathan experiences a consumer surplus of $3.
5. a
consumer surplus of $9, and Nathan experiences a producer surplus of $3.
6. a
producer surplus of $9, and Nathan experiences a producer surplus of $12.
15. Amanda
buys a ruby for $330 for which she was willing to pay $340. The minimum
acceptable price to the seller, Tony, was $140. Amanda experiences
190.
a consumer surplus of $10, and Tony experiences a producer
surplus of $190.
191.
a producer surplus of $200, and Tony experiences a consumer
surplus of $10.
192.
a consumer surplus of $670, and Tony experiences a producer
surplus of $200.
193.
a producer surplus of $10, and Tony experiences a consumer
surplus of $190.
16. Other
things equal, a fall in the market price caused by a change in supply will
1. increase
consumer
2. decrease
consumer
3. increase
producer surplus while leaving consumer surplus
4. decrease
producer surplus while leaving consumer surplus
17. Graphically,
if the supply and demand curves are linear, consumer surplus is measured as the
triangle
1. under
the demand curve and below the actual
2. under
the demand curve and above the actual
3. above
the supply curve and above the actual
4. above
the supply curve and below the actual
18. Graphically,
producer surplus is measured as the area
1. under
the demand curve and below the actual
2. under
the demand curve and above the actual
3. above
the supply curve and above the actual
4. above
the supply curve and below the actual
19. A
producer’s minimum acceptable price for a particular unit of a good
1. is
the same for all units of the
2. will,
for most units produced, equal the maximum that consumers are willing to pay
for the
3. equals
the marginal cost of producing that particular
4. must
cover the wages, rent, and interest payments necessary to produce the good but
need not include
5.
Refer to the diagram. Assuming equilibrium price P1, consumer surplus is
represented by areas
1. a + b.
2. a + b + c + d.
3. c + d.
4. a + c.
21.
Refer to the diagram. Assuming equilibrium price P1, producer surplus is
represented by areas
1. a + b.
2. a + b + c + d.
3. c + d.
4. a + c.
22.
Refer to the diagram. The area that identifies the maximum sum of
consumer surplus and producer surplus is
1. a + b + c + d + e + f.
2. c + d + f.
3. a + b + e.
4. a + b + c + d.
23.
Refer to the diagram. If actual production and consumption occur
at Q1,
1. efficiency
is
2. consumer
surplus is
3. an
efficiency loss (or deadweight loss) of b + d
4. an
efficiency loss (or deadweight loss) of e + d
5.
Refer to the diagram. If actual production and consumption occur
at Q2,
1. efficiency
is
2. an
efficiency loss (or deadweight loss) of a + b + c + d
3. an
efficiency loss (or deadweight loss) of a + c
4. an
efficiency loss (or deadweight loss) of e + f
25.
Refer to the diagram. If actual production and consumption occur
at Q3,
1. efficiency
is
2. an
efficiency loss (or deadweight loss) of e + f
3. an
efficiency loss (or deadweight loss) of a + b + c + d
4. an
efficiency loss (or deadweight loss) of a + c
26.
Refer to the diagram. Which of the following areas best
represents the efficiency loss from underproduction?
1. a + c
2. e + f
3. a + b + c + d
4. b + d
27. Allocative
efficiency occurs only at that output where
1. marginal
benefit exceeds marginal cost by the greatest
2. consumer
surplus exceeds producer surplus by the greatest
3. the combined
amounts of consumer surplus and producer surplus are
4. the
areas of consumer and producer surplus are
28. At
the output level defining allocative efficiency,
1. the
areas of consumer and producer surplus necessarily are
2. marginal
benefit exceeds marginal cost by the greatest
3. consumer
surplus exceeds producer surplus by the greatest
4. the
maximum willingness to pay for the last unit of output equals the minimum
acceptable price of that unit of
29. Which
of the following conditions does not need
to occur for a market to achieve allocative efficiency?
1. Consumers’
maximum willingness to pay equals producers’ minimum acceptable price for the
last unit of
2. The
sum of producer and consumer surplus is
3. The
total revenue received by producers equals the total cost of
4. The
marginal benefit of the last unit produced equals the marginal cost of
producing that
30. At
the output where the combined amounts of consumer and producer surplus are
largest,
1. the
areas of consumer and producer surplus necessarily are
2. the
maximum willingness to pay for the last unit of output equals the minimum
acceptable price of that unit of
3. consumer
surplus exceeds producer surplus by the greatest
4. marginal
benefit exceeds marginal cost by the greatest
31. An
efficiency loss (or deadweight loss)
1. is measured
as the combined loss of consumer surplus and producer surplus from over- or
2. results
from producing a unit of output for which the maximum willingness to pay
exceeds the minimum acceptable
3. can
result from underproduction, but not from
4. can
result from overproduction, but not from
32. An
efficiency loss (or deadweight loss) declines in size when a unit of output is
produced for which
1. marginal
cost exceeds marginal
2. maximum
willingness to pay exceeds minimum acceptable
3. consumer
surplus exceeds producer
4. producer
surplus exceeds consumer
33. The
two main characteristics of a public good are
1. production
at constant marginal cost and rising
2. nonexcludability
and production at rising marginal
3. nonrivalry
and
4. nonrivalry
and large negative
34. Nonrivalry
and nonexcludability are the main characteristics of
1. consumption
2. capital
3. private
4. public
35. Unlike
a private good, a public good
1. has
no opportunity
2. has
benefits available to all, including
3. produces
no positive or negative
4. is
characterized by rivalry and
36. Which
of the following is an example of a public good?
1. a
weather warning system
2. a
television set
3. a
sofa
4. a
bottle of soda
37. A
public good
1. can
be profitably produced by private
2. is
characterized by rivalry and
3. produces
no positive or negative
4. is available
to all and cannot be denied to
38. The
market system does not produce public goods because
1. there
is no need or demand for such
2. private
firms cannot stop consumers who are unwilling to pay for such goods from
benefiting from
3. public
enterprises can produce such goods at lower cost than can private
4. their
production seriously distorts the distribution of
39. Public
goods are those for which there
1. is no
free-rider
2. are
no
3. are
nonrivalry and non
4. are
rivalry and
40. If
one person’s consumption of a good does not preclude another’s consumption, the
good is said to be
1. nonrival
in
2. rival
in
3.
4.
41. Non
excludability describes a condition where
1. one
person’s consumption of a good does not prevent consumption of the good by
2. there
is no effective way to keep people from using a good once it comes into
3. sellers
can withhold the benefits of a good from those unwilling to pay for
4. there
is no potential for free-riding
42. Which
of the following statements is not true?
1. Some
public goods are paid for by private
2. Private
provision of public goods is usually
3. The
free-rider problem results from the characteristics of nonrivalry and
4. Public
goods are only provided by
43. Toll-free
roads sometimes get congested, such as during rush-hour During those times, we
would say that these roads are
1. excludable
and
2. excludable
and
3. nonexcludable
and
4. nonexcludable
and
44. Because
of the free-rider problem,
1. the
market demand for a public good is
2. the
market demand for a public good is nonexistent or
3. government
has increasingly yielded to the private sector in producing public
4. public
goods often create serious negative
45. At
the optimal quantity of a public good,
1. marginal
benefit exceeds marginal cost by the greatest
2. total
benefit equals total
3. marginal
benefit equals marginal
4. marginal
benefit is
46.
Answer the question on the basis of the following information
for a public good. Pa and Pb are the prices
that individuals A and B are willing to pay for the last unit of a public good,
rather than do without it. These people are the only two members of society.
|
Q |
Pa |
Pb |
|
1 |
$3 |
$5 |
|
2 |
2 |
4 |
|
3 |
1 |
3 |
|
4 |
0 |
2 |
|
5 |
0 |
1 |
The collective willingness of this society to pay for the second
unit of this public good is
2. $2.
3. $4.
4. $6.
5. $8.
47.
Answer the question on the basis of the
following information for a public good. Pa and Pb are the prices
that individuals A and B are willing to pay for the last unit of a public good,
rather than do without it. These people are the only two members of society.
|
Q |
Pa |
Pb |
|
1 |
$3 |
$5 |
|
2 |
2 |
4 |
|
3 |
1 |
3 |
|
4 |
0 |
2 |
|
5 |
0 |
1 |
If the marginal cost of producing this good at the optimal
quantity is $4, the optimal quantity must be
1. 1
2. 2
3. 3
4. 4
48.
Answer the question on the basis of the
following information for a public good. Pa and Pb are the prices
that individuals A and B are willing to pay for the last unit of a public good,
rather than do without it. These people are the only two members of society.
|
Q |
Pa |
Pb |
|
1 |
$3 |
$5 |
|
2 |
2 |
4 |
|
3 |
1 |
3 |
|
4 |
0 |
2 |
|
5 |
0 |
1 |
Suppose government has already produced 4 units of this public
good. The amount individual B is willing voluntarily to pay for the fourth unit
is
14. $14.
15. $5.
16. $2.
17. $0.
49.
Answer the question on the basis of the following information
for a public good. Pa and Pb are the prices
that individuals A and B are willing to pay for the last unit of a public good,
rather than do without it. These people are the only two members of society.
|
Q |
Pa |
Pb |
|
1 |
$3 |
$5 |
|
2 |
2 |
4 |
|
3 |
1 |
3 |
|
4 |
0 |
2 |
|
5 |
0 |
1 |
If this good were a private good instead of a public one, the
total quantity demanded at a $3 market price would be
1. 2
2. 3
3. 6
4. 4
50. A
demand curve for a public good is determined by
1. summing
vertically the individual demand curves for the public
2. summing
horizontally the individual demand curves for the public
3. combining
the amounts of the public good that the individual members of society demand at
each
4. multiplying
the per-unit cost of the public good by the quantity made
51. Suppose
that Mick and Cher are the only two members of society and are willing to pay
$10 and $8, respectively, for the third unit of a public Also, assume that the
marginal cost of the third unit is $17. We can conclude that
1. the
third unit should not be
2. the
third unit should be
3. zero
units should be
4. 4
units should be
52. Alex,
Kara, and Susie are the only three people in a Alex is willing to pay $20 for
the fifth unit of a public good; Kara, $15; and Susie, $25. Government should
produce the fifth unit of the public good if the marginal cost is less than or
equal to A. $25.
53. $15.
54. $60.
55. $20.
53. Alex,
Kara, and Susie are the only three people in a Alex is willing to pay $40 for
the third unit of a public good; Kara is willing to pay $25. If the marginal
cost of producing the third unit is $100, what is the minimum amount that Susie
must be willing to pay for it to be efficient for government to produce the
third unit?
1. $35
B. $100 C. $65
2. The
amount cannot be determined with the information provided.
54. For
which one of the following goods would we need to sum individual demand
curves vertically to
obtain the total demand curve?
1. frozen
yogurt
2. bubble
gum
3. microwave
popcorn
4. courts
of law
55.
Refer to the diagrams, in which figures (a) and (b) show demand
curves reflecting the prices Alvin and Elmer are willing to pay for a public
good, rather than do without it. The collective willingness to pay for the
first unit of this public good is
18. $18.
19. $14.
20. $10.
21. $6.
56.
Refer to the diagrams, in which figures (a) and (b) show demand
curves reflecting the prices Alvin and Elmer are willing to pay for a public
good, rather than do without it. If the marginal cost of the optimal quantity
of this public good is $10, the optimal quantity must be
1. 1
2. 2
3. 3
4. 4
57. Cost-benefit
analysis attempts to
1. compare
the real worth, rather than the market values, of various goods and
2. compare
the relative desirability of alternative distributions of
3. determine
whether it is better to cut government expenditures or reduce
4. compare
the benefits and costs associated with any economic project or
58.
The following data are for a series of increasingly extensive
flood-control projects.
|
|
Total Cost Per Year |
Total Benefit Per Year |
|
|
Plan |
A = Levees |
$10,000 |
$16,000 |
|
Plan |
B = Small Reservoir |
24,000 |
36,000 |
|
Plan |
C = Medium Reservoir |
44,000 |
52,000 |
|
Plan |
D = Large Reservoir |
72,000 |
64,000 |
For Plan D marginal costs and marginal benefits are
1. $72,000
and $64,000,
2. $28,000
and $12,000,
3. $24,000
and $18,000,
4. $16,000
and $28,000,
59.
The following data are for a series of increasingly extensive
flood-control projects.
|
|
Total Cost Per Year |
Total Benefit Per Year |
|
|
Plan |
A = Levees |
$10,000 |
$16,000 |
|
Plan |
B = Small Reservoir |
24,000 |
36,000 |
|
Plan |
C = Medium Reservoir |
44,000 |
52,000 |
|
Plan |
D = Large Reservoir |
72,000 |
64,000 |
On the basis of cost-benefit analysis, government should
undertake
1. Plan
2. Plan
3. Plan
4. Plan
60.
The following data are for a series of increasingly extensive
flood-control projects.
|
|
Total Cost Per Year |
Total Benefit Per Year |
|
|
Plan |
A = Levees |
$10,000 |
$16,000 |
|
Plan |
B = Small Reservoir |
24,000 |
36,000 |
|
Plan |
C = Medium Reservoir |
44,000 |
52,000 |
|
Plan |
D = Large Reservoir |
72,000 |
64,000 |
Plan C entails
1. marginal
benefits in excess of marginal
2. fewer
spillovers than either Plan A or Plan
3. an
overallocation of resources to flood
4. an
underallocation of resources to flood
61.
Answer the question on the basis of the following information
for four highway programs of increasing scope. All figures are in millions of
dollars.
|
Program |
Total Cost |
Total Benefit |
|
A |
$2 |
$9 |
|
B |
6 |
16 |
|
C |
12 |
21 |
|
D |
20 |
23 |
The data indicate that
1. there
is no highway program that is economically justifiable on the basis of
cost-benefit
2. the
marginal cost and marginal benefit of Program A are $2 and $9,
3. the
marginal cost and marginal benefit of Program C are $12 and $21,
4. program
D is optimal because it maximizes the total
62.
Answer the question on the basis of the following information
for four highway programs of increasing scope. All figures are in millions of
dollars.
|
Program |
Total Cost |
Total Benefit |
|
A |
$2 |
$9 |
|
B |
6 |
16 |
|
C |
12 |
21 |
|
D |
20 |
23 |
On the basis of the data, we can say that
1. Program
D is the most efficient on economic
2. Program
C is the most efficient on economic
3. Program
B is the most efficient on economic
4. Program
A is the most efficient on economic
63. According
to the marginal-cost–marginal-benefit rule,
1. only
government projects (as opposed to private projects) should be assessed by
comparing marginal costs and marginal
2. the
optimal project size is the one for which MB =
3. the
optimal project size is the one for which MB exceeds MC by the greatest
4. project
managers should attempt to minimize both MB and
64. Economists
consider governments to be “wasteful”
1. whenever
they over- or underallocate resources to a
2. only
when they overallocate resources to a
3. only
when they underallocate resources to a
4. whenever
they attempt to correct a market
65. A
positive externality or spillover benefit occurs when
1. product
differentiation increases the variety of products available to
2. the
benefits associated with a product exceed those accruing to people who consume
3. a
firm does not bear all of the costs of producing a good or
4. firms
earn positive economic
66. A
negative externality or spillover cost occurs when
1. firms
fail to achieve allocative
2. firms
fail to achieve productive
3. the
price of a good exceeds the marginal cost of producing
4. the
total cost of producing a good exceeds the costs borne by the
67.
Refer to the diagram, in which S is the market supply curve and S1 is a supply
curve comprising all costs of production, including external costs. Assume that
the number of people affected by these external costs is large. Without
government interference, this market will reach
1. an
optimal allocation of society’s
2. an
underallocation of resources to this
3. an
overallocation of resources to this product.
4. a
higher price than is consistent with an optimal allocation of
68.
Refer to the diagram, in which S is the market supply curve and S1 is a supply
curve comprising all costs of production, including external costs. Assume that
the number of people affected by these external costs is large. If the
government wishes to establish an optimal allocation of resources in this
market, it should
1. not intervene
because the market outcome is
2. subsidize
consumers so that the market demand curve shifts
3. subsidize
producers so that the market supply curve shifts
4. tax
producers so that the market supply curve shifts
69.
Refer to the diagrams for two separate product markets.
Assume that society’s optimal level of output in each
market is Q0
and that government purposely shifts the market supply curve from S to S1
in diagram (a) on the left and from S to S2 in diagram (b) on the right.
We can conclude that the government is correcting for
1. negative
externalities in diagram (a) and positive externalities in diagram (b).
2. positive
externalities in diagram (a) and negative externalities in diagram (b).
3. negative
externalities in both
4. positive
externalities in both
70.
Refer to the diagrams for two separate product markets.
Assume that society’s optimal level of output in each
market is Q0
and that government purposely shifts the market supply curve from S to S1
in diagram (a) on the left and from S to S2 in diagram (b) on the right.
The shift of the supply curve from S to S1 in diagram (a) might
be caused by a per-unit
1. subsidy
paid to the producers of this product.
2. tax
on the producers of this
3. subsidy
paid to the buyers of this product.
4. tax
on the buyers of this
71.
Refer to the diagrams for two separate product markets. Assume
that society’s optimal level of output in each market is Q0 and that
government purposely shifts the market supply curve from S to S1 in diagram (a) on the
left and from S to S2 in diagram (b) on the
right. The shift of the supply curve from S to S2 in diagram (b) might be caused by a
per-unit
1. subsidy
paid to the producers of this product.
2. tax
on the producers of this
3. subsidy
paid to the buyers of this product.
4. tax
on the buyers of this
72.
Refer to the competitive market diagram for
product Z. Assume that the current market demand
and supply curves for Z are D1
and S1. If there are
substantial external benefits associated with the production of Z, then
1. government
can improve the allocation of resources by subsidizing consumers of
2. government
can improve the allocation of resources by imposing a per-unit tax on
3. a
government subsidy for producers of Z would ensure that consumers are paying
directly for all of the benefits they receive from
4. consumers
are paying too much for the
73.
Refer to the competitive market diagram for
product Z. Assume that the current market demand
and supply curves for Z are D2 and S2. If there are substantial
external benefits associated with the production of Z, then
1. efficient
resource allocation occurs at output G and
price B because
the market mechanism does not measure all
2. an
output smaller than G would
improve resource
3. governmentshould levy
a per-unit excise tax on Z to shift the demand curve toward D1.
4. an
output greater than G would
result in a more efficient allocation of
74.
Refer to the competitive
market diagram for product Z. Assume that the
current market demand and supply curves for Z are D2 and S2. If there
are substantial external costs associated with the production of Z, then
1. a
price lower than B and
an output greater than G would
improve resource
2. government
should levy a per-unit excise tax on Z to shift the demand curve to the
3. governmentshould levy
a per-unit excise tax on Z to shift the supply curve toward S1.
4. government
should subsidize the production of Z to lower equilibrium price and increase
equilibrium
75.
Refer to the diagram of the market for product X. Curve St embodies all
costs (including externalities), and Dt embodies
all benefits (including externalities) associated with the production and
consumption of X. Assuming the market equilibrium output is Q1, we can conclude that
the existence of external
1. costs
has resulted in an overallocation of resources to
2. benefits
has resulted in an overallocation of resources to
3. costs
has resulted in an underallocation of resources to
4. benefits
has resulted in an underallocation of resources to
76.
Refer to the diagram of the market for product X. Curve St embodies all
costs (including externalities), and Dt embodies
all benefits (including externalities) associated with the production and
consumption of X. Assuming the equilibrium output is Q2, we can conclude that
the existence of external
1. costs
has resulted in an overallocation of resources to
2. benefits
has resulted in an overallocation of resources to
3. costs
has resulted in an underallocation of resources to
4. benefits
has resulted in an underallocation of resources to
77. If a
good that generates positive externalities was produced and priced to take into
account these spillover benefits, then its
1. price
and output would
2. output
would increase, but price would remain
3. price
would increase and output would
4. price
would increase, but output would remain
78. Pigovian
taxes
1. are
used to correct negative
2. are
used to correct positive
3. are
primarily designed to fund public
4. are a
form of income
79. Suppose
that the Anytown city government asks private citizens to donate money to
support the town’s annual holiday lighting Assuming that the citizens of
Anytown enjoy the lighting display, the request for donations suggests that
1. the
display creates negative
2. government
should tax the producers of holiday
3. resources
are currently overallocated to the provision of holiday lighting in
4. resources
are currently underallocated to the provision of holiday lighting in
80. The
socially optimal amount of pollution abatement occurs where society’s marginal
1. benefit
of abatement exceeds its marginal cost of abatement by the greatest
2. benefit
of abatement equals its marginal cost of
3. benefit
of abatement is
4. cost
of abatement is at its
81. The
marginal benefit to society of reducing pollution declines with increases in
pollution abatement because of the law of
1. increasing
2. diminishing
3. diminishing
marginal
4. conservation
of matter and
82. The
marginal cost to society of reducing pollution rises with increases in
pollution abatement because of the law of
1. diminishing
marginal
2. conservation
of matter and
3.
4. diminishing
83.
Refer to the diagram.
From society’s perspective, if MB1 and MC2 are
relevant,
1. Q2represents
too little pollution
2. Q1
represents toomuch pollution
3. Q2represents
an optimal amount of pollution
4. Q4
representstoo little pollution
84.
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