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True or False Quiz
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1
A market is productively efficient if the price of a product equals the minimum average cost
A)True
B)False
2
When a competitive market is in long-run equilibrium, the firms will be making economic profits but not normal profits.
A)True
B)False
3
The provision of private goods is an example of a market failure.
A)True
B)False
4
Long-run equilibrium in competitive markets implies that P = MC = AC.
A)True
B)False
5
By non-excludability, economists mean the inability of some firms to prevent certain people from buying a product.
A)True
B)False
6
An externality is a benefit or cost experienced by people who neither produce nor consume that product.
A)True
B)False
7
A subsidy granted to a polluting firm would be one way of integrating external costs.
A)True
B)False
8
Marginal social benefits are the total of both marginal private benefits and marginal external benefits.
A)True
B)False
9
By introducing a pollution permit fee for a lake, government allows the polluters to decide for themselves the acceptable level of pollution.
A)True
B)False
10
If external benefits are not integrated into the market, insufficient quantities of a product will be produced.
A)True
B)False





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