Bob has a demand curve for public broadcasting

| November 24, 2016

QUESTION 6
Bob has a demand curve for public broadcasting (denoted by G) given by the following: G = 9 – 0.5p. Similarly, Christine has a demand curve given by the following: G= 7 – p. Assume that the marginal cost of providing every hour of broadcasting is equal to 10. The efficient number of hours supplied equals:

0.

4.

5.

7.

10.

QUESTION 7
New Zealand is a small open economy (a price taker) that imports solar panels, an internationally traded commodity. Suppose that it imports a large fraction of the total quantity demanded of solar panels. Suppose the demand for solar panels in New Zealand falls by 5 per cent. The domestic price of solar panels ______ and imports _______.

falls, decrease.

falls, increase.

remains unchanged, decrease.

remains unchanged, increase.

none of the above.

QUESTION 8
Which of the following statements is true?

A public good can be characterised as a good with an externality because individuals compare only the private marginal benefits and costs when deciding how much to purchase.

A public good is non rivalrous.

A public good is non excludable.

b and c are correct but a is incorrect.

a, b and c are correct.

QUESTION 9
Assume that the domestic demand for cars is given by Qd=14000-2P and the domestic supply of cars is given by Qs=P-1000. Further assume that the world price for cars is given by $6000. In the presence of international trade the price in the domestic market exchanged is ______ and consumer surplus is equal to _________:

5,000; 1,000,000.

5,000; 2,000,000.

6,000; 1,000,000.

6,000; 2,000,000.

None of the above.

QUESTION 10
Which of the following statements about markets and the problem of externalities is (are) true?
Externalities generally lead to an inefficient level of consumption and or production
The inefficiency caused by an externality may be resolved by appropriately defining property rights
Taxes or subsidies may be used to correct the inefficiency caused by an externality
Even for a negative externality such as pollution, efficiency generally requires a positive level of pollution
All of the above.

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