Public Finance Harvey Rosen 10th Edition – Test Bank

1.

Marginal damages are hard to measure because 
 

A.  they can be generated from multiple sources.

B.  they are hard to graph.

C.  they happen over time.

D.  no one cares about them.

2.

In the figure below, if the marginal damages line did not originate at 0,

A.  it would mean that marginal damages did not exist.

B.  there is no way to find MSC.

C.  MSC would not originate at the same intercept as MPC.

D.  all of these answer options are correct.

3.

Externalities can be positive because 
 

A.  marginal damages do not last over time.

B.  utility can be impacted positively as well as negatively.

C.  there is no concept for marginal benefit.

D.  positive externalities are subsidies.

4.

Refer to the following graphs. Which graph(s) represent(s) an externality?

A.  graph A

B.  graphs A and B

C.  graph B

D.  neither graph A nor graph B

5.

Refer to the figure below. What is the total amount of tax paid by Bart?

A.  0

B.  50

C.  15

D.  750

6.

Congestion pricing 
 

A.  is a tax.

B.  keeps nasal passages clear.

C.  is never efficient.

D.  all of these answer options are correct.

7.

Pollution rights may be traded if 
 

A.  polluters try to hide pollution.

B.  administrators are uncertain about Pigouvian taxes.

C.  there is no market for pollution.

D.  pollution is harmless.

8.

Externalities can be produced by ____________, as well as ____________. 
 

A.  individuals; firms

B.  market prices; market incomes

C.  oceans; streams

D.  none of these answer options are correct.

9.

A Pigouvian tax corrects for 
 

A.  market congestion.

B.  market losses.

C.  inefficient sales.

D.  low market prices.