1. The Coase Theorem asserts that

QUESTION 1

1. Alternative approaches for reducing carbon dioxide emissions are

		burning low carbon coal and deforestation.
		carbon taxes and carbon scrubbing.
		carbon taxes and carbon trading.
		carbon trading and carbon subsidies.

2 points   

QUESTION 2

1. The Coase Theorem asserts that

		if trade in an externality is possible and there are low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.
		Bargaining between the parties to an external cost of production can never lead to an efficient market solution to deal with the externality.
		there is no solution to the problem of market externalities
		the government must always directly intervene with a command and control policy to deal effectively with a negative externality such as pollution.

2 points   

QUESTION 3

1. Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

		quasi-public goods
		common resources
		public goods
		private goods

2 points   

QUESTION 4

1. Which of the following is not an advantage of risk pooling?

		Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services.
		It is easier for an insurance company to estimate the average number of claims likely to be filed under a group policy than it is to predict the number of claims likely to be filed under an individual policy.
		It gives very sick people in the group the same access to health care and to pay the same premiums as healthy individuals.
		By insuring large groups as opposed to individuals, health insurance providers reduce adverse selection.

2 points   

QUESTION 5

1. The cost of group health insurance is lower than if an individual buys a policy on his own because

		insuring a group eliminates the problem of buyers having more information than the seller.
		moral hazard costs of a group tend to move to a low average.
		it is easier for the company to deny claims from a large group.
		the problem of adverse selection is reduced.

2 points   

QUESTION 6

1. Some environmentalists are skeptical  about the appointment of  Judge Amy Coney Barrett to the Supreme Court  and her interpretation of Administrative Law because:

		She said that she is very knowledgeable about climate science in her Senate testimony
		She graduated from Harvard and is therefore biased
		She might uphold the court’s decision in  Massachusetts vs. EPA
		Climate change wasn’t included in the original mandate of the EPA, and Congress has never explicitly told the agency to regulate greenhouse gas emissions,

2 points   

QUESTION 7

1. The demand curve for a public good is also called the

		total welfare curve.
		total willingness-to-pay curve.
		marginal social benefit curve.
		total social benefit curve.

2 points   

QUESTION 8

If a Pigouvian tax is larger than what it costs a firm to clean up its pollution emissions, then the firm will generally choose to clean up its emissions rather than pay the Pigouvian tax.

		True
		False

2 points   

QUESTION 9

1.

Referring to figure 5-7 above, and assume that we are trying to reduce carbon emissions.  If poor forest management caused  the recent California Wildfires, then that would mean:

 

		the Marginal Benefit of Reducing Pollution curve shifts to the left (decreases) if the wildfires had little to do with carbon emissions.
		the efficient level of pollution reduction is QA
		there is no way to estimate the benefits and costs of carbon emission reduction, so this framework is only theoretical.
		the efficient level of pollution reduction is QE

 

2 points   

QUESTION 10

1. Health insurance companies impose deductibles on policies and co-payments on claims

		to reduce moral hazard problems.
		to increase sales.
		to reduces sunk costs.
		to increase prices.

2 points   

QUESTION 11

1. Social Security Disability Insurance (SSDI) and Supplemental Security Insurance programs, the US government provides disability insurance to all, providing monthly income to the disabled through (in the case of SSDI) premiums levied on the healthy. The government does this because:

		it has pushed out private insurers in this market.
		when all group members (workers) pay the premium, the problem of adverse selection is reduced.
		such insurance does not meet the criteria for an incomplete market.
		the US Constitution mandates all citizens to buy social insurance.

2 points   

QUESTION 12

1. Conceptually, the efficient level of carbon emissions is the level for which

		the marginal benefit of reducing carbon emissions is maximized.
		the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized.
		the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.
		the marginal cost of reducing carbon emissions is minimized.

2 points   

QUESTION 13

1. According to former Labor Secretary Robert Reich the administrative costs of Medicare for All would be much higher than private insurance.

True

False

2 points   

QUESTION 14

1. The social benefit of a given level of a public good is the vertical sum of all private benefits for that level.

2.		True
		False

2 points   

QUESTION 15

1. The Pre-Existing Condition Insurance Plan is a federally administered part of the Affordable Care Act, and is designed for people with pre-existing medical conditions to obtain insurance. By offering health insurance to all U.S. citizens with pre-existing medical conditions, the Pre-Existing Condition Insurance Plan eliminates ________ for both the insurer and the insured, and eliminates ________ for the issuer of the insurance policy.

		asymmetric information; adverse selection
		moral hazard; adverse selection
		adverse selection; the principal-agent problem
		the principal-agent problem; moral hazard

2 points   

QUESTION 16

1. According to Mariana Mazzucato the positive externality of a COVID vaccine is large enough to cover the cost of the investment needed to provide a vaccine that would be provided at no charge to the public (i.e., free for all who want it in the US and the Rest of the World).

		True
		False

2 points   

QUESTION 17

1. Unlike the Affordable Care Act, Medicare for All would provide universal health care coverage for all Americans

True

False

2 points   

QUESTION 18

1. A carbon tax which is designed to reduce pollution is an example of a

		command-and-control policy.
		government administrative rule.
		noneffective incentive.
		market-based policy.

2 points   

QUESTION 19

1. In a market with negative externalities (e.g. large-scale meat packing and offshore oil exploration), equilibrium price does not reflect full marginal social cost, and like a subsidy, this leads to excessive production and consumption of the good.

		True
		False

2 points   

QUESTION 20

1. Mariana Mazzucato draws connections between government spending on general purpose technologies (GPTs) and increases in innovation for consumer products. She asserts that:

		public sector spending should never add to the size of the government deficit
		government spending is a complement, not a substitute, for private sector investments.
		public sector spending is too large as a proportion of Gross Domestic Product
		government spending crowds out private investment spending.

2 points   

QUESTION 21

1. In economics, the term “free rider” refers to

		a supervisor who delegates menial time-consuming activities to others.
		one who waits for others to produce a good and then enjoys its benefits without paying for it.
		a person who evades taxes.
		one who volunteers her services.

2 points   

QUESTION 22

1.

Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 5-10.

Refer to Figure 5-10.  One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations. What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?

 

 

		(PE – PG)
		PE
		PF
		(PE – PF)

 

2 points   

QUESTION 23

Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain then, according to the Coase theorem

		an efficient solution can be reached only if property rights are assigned to the victims of the pollution.
		an efficient solution can be reached regardless of the initial assignment of property rights.
		government intervention is critical to reach an efficient solution.
		an efficient solution can be reached only if property rights are assigned to the polluters.

2 points   

Attempt 1 correct and wrong answer, the form of question 9 and 22 can be found in above part

 

· Question 1

0 out of 2 points

	Alternative approaches for reducing carbon dioxide emissions are
	Selected Answer: carbon taxes and carbon scrubbing.

· Question 2

2 out of 2 points

	The Coase Theorem asserts that
	Selected Answer: if trade in an externality is possible and there are low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

· Question 3

0 out of 2 points

	Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?
	Selected Answer: quasi-public goods

· Question 4

2 out of 2 points

	Which of the following is not an advantage of risk pooling?
	Selected Answer: Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services.

· Question 5

0 out of 2 points

	The cost of group health insurance is lower than if an individual buys a policy on his own because
	Selected Answer: moral hazard costs of a group tend to move to a low average.

· Question 6

2 out of 2 points

	Some environmentalists are skeptical  about the appointment of  Judge Amy Coney Barrett to the Supreme Court  and her interpretation of Administrative Law because:
	Selected Answer: Climate change wasn’t included in the original mandate of the EPA, and Congress has never explicitly told the agency to regulate greenhouse gas emissions,

· Question 7

2 out of 2 points

	The demand curve for a public good is also called the
	Selected Answer: marginal social benefit curve.

· Question 8

2 out of 2 points

	If a Pigouvian tax is larger than what it costs a firm to clean up its pollution emissions, then the firm will generally choose to clean up its emissions rather than pay the Pigouvian tax.
	Selected Answer: True

· Question 9

0 out of 2 points

	Referring to figure 5-7 above, and assume that we are trying to reduce carbon emissions.  If poor forest management caused  the recent California Wildfires, then that would mean:
	Selected Answer: the efficient level of pollution reduction is QA

· Question 10

2 out of 2 points

	Health insurance companies impose deductibles on policies and co-payments on claims
	Selected Answer: to reduce moral hazard problems.

· Question 11

2 out of 2 points

	Social Security Disability Insurance (SSDI) and Supplemental Security Insurance programs, the US government provides disability insurance to all, providing monthly income to the disabled through (in the case of SSDI) premiums levied on the healthy. The government does this because:
	Selected Answer: when all group members (workers) pay the premium, the problem of adverse selection is reduced.

· Question 12

2 out of 2 points

	Conceptually, the efficient level of carbon emissions is the level for which
	Selected Answer: the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

· Question 13

2 out of 2 points

	According to former Labor Secretary Robert Reich the administrative costs of Medicare for All would be much higher than private insurance.
	Selected Answer: False

· Question 14

2 out of 2 points

	The social benefit of a given level of a public good is the vertical sum of all private benefits for that level.
	Selected Answer: True

· Question 15

0 out of 2 points

	The Pre-Existing Condition Insurance Plan is a federally administered part of the Affordable Care Act, and is designed for people with pre-existing medical conditions to obtain insurance. By offering health insurance to all U.S. citizens with pre-existing medical conditions, the Pre-Existing Condition Insurance Plan eliminates ________ for both the insurer and the insured, and eliminates ________ for the issuer of the insurance policy.
	Selected Answer: moral hazard; adverse selection

· Question 16

0 out of 2 points

	According to Mariana Mazzucato the positive externality of a COVID vaccine is large enough to cover the cost of the investment needed to provide a vaccine that would be provided at no charge to the public (i.e., free for all who want it in the US and the Rest of the World).
	Selected Answer: False

· Question 17

2 out of 2 points

	Unlike the Affordable Care Act, Medicare for All would provide universal health care coverage for all Americans
	Selected Answer: True

· Question 18

2 out of 2 points

	A carbon tax which is designed to reduce pollution is an example of a
	Selected Answer: market-based policy.

· Question 19

2 out of 2 points

	In a market with negative externalities (e.g. large-scale meat packing and offshore oil exploration), equilibrium price does not reflect full marginal social cost, and like a subsidy, this leads to excessive production and consumption of the good.
	Selected Answer: True

· Question 20

0 out of 2 points

	Mariana Mazzucato draws connections between government spending on general purpose technologies (GPTs) and increases in innovation for consumer products. She asserts that:
	Selected Answer: public sector spending is too large as a proportion of Gross Domestic Product

· Question 21

2 out of 2 points

	In economics, the term “free rider” refers to
	Selected Answer: one who waits for others to produce a good and then enjoys its benefits without paying for it.

· Question 22

0 out of 2 points

	Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 5-10. Refer to Figure 5-10.  One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations. What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?
	Selected Answer: (PE – PF)

· Question 23

2 out of 2 points

	Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain then, according to the Coase theorem
	Selected Answer: an efficient solution can be reached regardless of the initial assignment of property rights.