Q7. Which of the following most accurately describes society's allocation of resources to the production of goods with external costs or external benefits, respectively?

A)   Under-allocation; over-allocation.

B)   Over-allocation; over-allocation.

C)   Over-allocation; under allocation.

Q8. Which of the following relationships most accurately describes the inefficiency resulting form government imposed production quotas?

A)   Marginal cost exceeds marginal benefit leading to underproduction.

B)   Marginal benefit exceeds marginal cost leading to underproduction.

C)   Marginal benefit exceeds marginal cost leading to overproduction.

Q9. Which of the following is least likely to be considered an obstacle to the efficient allocation of an economy’s resources?

A)   Changes in consumer tastes.

B)   Rent controls.

C)   Taxes.

Q10. Which of the following is least likely to be an obstacle to the efficient allocation of resources?

A)   Technological advancement.

B)   Monopoly.

C)   Price controls.

答案和详解如下：

Q7. Which of the following most accurately describes society's allocation of resources to the production of goods with external costs or external benefits, respectively?

A)   Under-allocation; over-allocation.

B)   Over-allocation; over-allocation.

C)   Over-allocation; under allocation.

Correct answer is C)

External costs are costs associated with the production of goods which are not entirely borne by producers. The industrial pollution of fishing waters decreases the yield to the fishing industry. However, the lost revenue to the fishing industry is not considered a cost to the firms generating the pollution. The result is an over-allocation of resources to the production of goods made by the firms generating the pollution.

External benefits refer to benefits received by those other than the buyers of a good. Scenic gardens and fountains built by private enterprises for their own interests are examples of goods with external benefits. Since the marginal benefit to society is greater than that of the marginal cost to the producer, less than the efficient quantity is produced.

Q8. Which of the following relationships most accurately describes the inefficiency resulting form government imposed production quotas?

A)   Marginal cost exceeds marginal benefit leading to underproduction.

B)   Marginal benefit exceeds marginal cost leading to underproduction.

C)   Marginal benefit exceeds marginal cost leading to overproduction.

Correct answer is B)

Government imposed quotas restrict production to a level below that which would occur if marginal benefit equals marginal cost. This restricted output quantity is less than the equilibrium quantity, so marginal benefit exceeds marginal cost.

Q9. Which of the following is least likely to be considered an obstacle to the efficient allocation of an economy’s resources?

A)   Changes in consumer tastes.

B)   Rent controls.

C)   Taxes.

Correct answer is A)

Price controls and taxes are obstacles to allocative efficiency. Rent controls and minimum wages are examples of price controls. As opposed to being obstacles to the efficient allocation of resources, changes in consumer tastes lead to the reallocation of society’s resources, producing a different mix of goods or services that provide increased benefits.

Q10. Which of the following is least likely to be an obstacle to the efficient allocation of resources?

A)   Technological advancement.

B)   Monopoly.

C)   Price controls.

Correct answer is A)

As opposed to being an obstacle to allocative efficiency, technological advancement requires a constant reallocation of an economy’s resources to more efficient uses.

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