How do we adjust a current-period market graph

Question

1. At a market equilibrium, the marginal net benefit curve is ...

• Increasing
• Decreasing
• Horizontal
• Vertical
• Maximized

2. Suppose a demand schedule is P = 100 - Q and a supply schedule is P = 20 + 2Q. What is the marginal net benefit curve?

• MNB = 80 + Q
• MNB = 120 - Q
• MNB = 80 - Q
• MNB = 80 - 3Q
• MNB = 120 - 3Q

3. Suppose a demand curve is Q = 100 - P and a supply curve is Q = 0.5P - 25. What is the marginal net benefit curve?

• MNB = 125 + 1.5Q
• MNB = 50 + 3Q
• MNB = 75 - 0.5Q
• MNB = 125 - 1.5Q
• MNB = 50 - 3Q

4. Total net benefits are maximized when marginal net benefits are ...

• Zero
• Equal to the discount rate
• Maximized
• Minimized
• Equal to price

5. In a two time-period example, economic efficiency is maximized when ...

• The marginal net benefits are maximized in both time periods
• The marginal net benefits in the first period are set equal to the discount rate in the second time period
• The marginal net benefits in the first period are set equal to the user costs in the second time period
• The discount rate is set equal to the marginal benefits
• The marginal net benefit in the first time period is set equal to the present value of marginal net benefits in the second time period

6. Assuming economic efficiency is maximized, when will more of a resource tend to be used in the first time period (as compared to future time periods)?

• Whenever the discount rate is zero
• Whenever the user costs are positive in the present
• Whenever the discount rate is positive
• Whenever the marginal net benefits in the present are positive
• Whenever the marginal net benefits in the future are negative

7. Costs imposed on future users of a resource are called ...

• Private costs
• Depletion costs
• Transactions costs
• Social costs
• User costs

8. Under which one of the following conditions will economic theory indicate that a resource should be consumed in the current period?

• When substitute resources are available
• When the marginal net benefits in the future are not discounted
• When the discount rate is positive
• When the marginal net benefits in the current period are greater than the marginal net benefits in the future
• When the users' costs are positive

9. How do we adjust a current-period market graph to incorporate user costs?

• Subtract the user costs from the supply curve
• Add the user costs to the demand curve
• Add the user costs to both the supply curve and the demand curve
• Add the user costs to the supply curve
• Subtract the user costs from the demand curve

10. User costs will be incorporated into a market if ...

• Resource owners foresee future shortages
• Government intervention is eliminated
• Interest rates are positive
• Discount rates are zero
• Discount rates are positive