Question

QUESTION 2

Government intervention that aims to promote technology-enhancing industries is called

	a.	industrial technology assistance.
	b.	intervention policy.
	c.	assisted technology.
	d.	industrial policy.

4 points   

QUESTION 3

Which of the following statements is not correct?

	a.	Government policies may improve the market's allocation of resources when negative externalities are present.
	b.	Without government intervention, the market will tend to undersupply products that produce negative externalities.
	c.	Government policies may improve the market's allocation of resources when positive externalities are present.
	d.	A positive externality is an example of a market failure.

4 points   

QUESTION 4

Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,

	a.	the supply curve would adequately reflect the marginal social cost of production.
	b.	producers will produce less steel than they otherwise would if the externality were internalized.
	c.	the market equilibrium quantity will not be the socially optimal quantity.
	d.	consumers will be required to pay a higher price for steel than they would have if the externality were internalized.

4 points   

QUESTION 5

Positive externalities

	a.	can be internalized with a corrective tax.
	b.	result in smaller than efficient equilibrium quantity.
	c.	result in an efficient equilibrium quantity.
	d.	result in a larger than efficient equilibrium quantity.

4 points   

QUESTION 6

According to the Coase theorem, in the presence of externalities

	a.	private parties can bargain to reach an efficient outcome.
	b.	the initial distribution of property rights will determine the efficient outcome.
	c.	the assignment of legal rights can prevent externalities.
	d.	government assistance is necessary to reach an efficient outcome.

Answer 1

Question 2

When government wants to promote industries or wants to bring industrial development in an economy then in that case it generally formulate industrial policy.

So,

Government intervention that aims to promote technology-enhancing industries is called the industrial policy.

Hence, the correct answer is the option (d).

Question 3

When production of a good generates negative externality then in that case social cost of production is greater than the private cost of production.

This leads to production being greater than the efficient level.

In such case, without government intervention, the market will tend to oversupply products that produce negative externality.

Hence, the correct answer is the option (b).