Public Finance in Canada 5Th Canadian Edition By Harvey S Rosen – Test Bank

Public Finance in Canada 5Th Canadian Edition By Harvey S Rosen – Test Bank

File: Chapter 05 Test Bank

Multiple Choice

[QUESTION]

1. Marginal damages are hard to measure because

A. they can be generated from multiple sources.

B. they are hard to quantify.

C. it can be difficult to determine what causes harm.

D. all of these answers are correct.

Ans: D

Topic: 05-02

Blooms: Understand

Difficulty: Moderate

[QUESTION]

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 SMC.

C. SMC would not originate at the same intercept as PMC.

D. all of these answers are correct.

Ans: C

Topic: 05-02

Blooms: Understand

Difficulty: Moderate

[QUESTION]

3. Externalities can be positive because

A. marginal damages do not last over time.

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

C. there is no concept for marginal benefit.

D. positive externalities are subsidies.

Ans: B

Topic: 05-01

Blooms: Understand

Difficulty: Moderate

[QUESTION]

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

A. $0

B. $50

C. $15

D. $750

Ans: D

Topic: 05-10

Blooms: Understand

Difficulty: Moderate

[QUESTION]

5. Finding the Pigouvian tax rate is

A. hard because marginal damages are difficult to estimate.

B. easy because marginal damages are not difficult to estimate.

C. never efficient.

D. impossible because there are no marginal damages.

Ans: A

Topic: 05-10

Blooms: Remember

Difficulty: Easy

[QUESTION]

6. 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.

Ans: B

Topic: 05-10

Blooms: Understand

Difficulty: Moderate

[QUESTION]

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

A. consumers; firms

B. market prices; market incomes

C. efficient markets; inefficient markets

D. none of these answers is correct

Ans: A

Topic: 05-01

Blooms: Remember

Difficulty: Easy

[QUESTION]

8. A Pigouvian tax is equal to

A. the social marginal cost.

B. the price that reduces pollution to zero.

C. the marginal benefit done at the efficient level of output.

D. the marginal damage done at the efficient level of output.

Ans: D

Topic: 05-10

Blooms: Remember

Difficulty: Easy

[QUESTION]

9. Which of the following is correct?

A. SMC = PMC – MD

B. PMB = SMB + EMB

C. SMC = PMC + MD

D. SMB = SMC + PMB

Ans: C

Topic: 05-02

Blooms: Remember

Difficulty: Easy

[QUESTION]