Multiple choice questions

1. Độc quyền tự nhiên gắn với?

A. Rào cản sở hữu trí tuệ
B. Sản xuất quy mô lớn → Natural monopoly has relatively large-scale firms are low-cost
producers
C. Bảo hành dài hạn
D. Luồng đầu tư nước ngoài lớn

2. Đâu không biện pháp Nhà nước can thiệp độc quyền tự nhiên?
A. Định giá bằng AC
B. Cấm độc quyền
C. Trợ cấp
D. Đánh thuế

3. Đánh Thuế Lan để trợ cấp cho Hải nhằm mục đích gì?
A. Nhằm xóa đói giảm nghèo
B. Nhằm tăng hiệu quả thị trường
C. Nhằm tái phân bổ thu nhập
D. Nhằm đạt được một cân bằng cạnh tranh
E. Cả a và c

4. Hình thức can thiệp để giảm giá bán hàng hóa cá nhân là gì?
A. Ủy quyền cho tư nhân cung cấp
B. Trợ cấp
C. Đánh thuế
D. Cung cấp công cộng

5. Đâu là hàng hóa công công không thuần túy?

A. Một cây cầu
B. Quốc phòng
C. Một chiếc ô tô đồ chơi
D. Một chiếc bánh mì

6. Việc quy định giá sàn thường áp dụng với?

A. Hàng điện tử
B. Hàng hóa do hãng độc quyền cung cấp
C. Hàng công nghệ
D. Sức lao động

7. Khi thị trường cạnh tranh không dẫn đến đầu ra hiệu quả, nhận định nào đúng:
A. Sự can thiệp của chính phủ làm tăng hiệu quả
B. Sự can thiệp của chính phủ làm giảm hiệu quả
C. Sự can thiệp của chính phủ không tác động tới hiệu quả
D. Sự can thiệp của chính phủ làm tăng hoặc giảm hiệu quả
8. Giả định quan trọng của thuyết bất khả thi Arrow?
A. Lựa chọn 3 đỉnh
B. Lựa chọn 2 đỉnh
C. Lựa chọn đơn đỉnh
D. Cả 3 đáp án trên

9. Bạn chung phòng hút thuốc lá, tạo ra chi phí cho bạn (MEC). Định lý Coase cho rằng giải pháp đạt
được khi?
A. Chính phủ quy định người bạn cùng phòng sở hữu không khí trong phòng
B. Chính phủ quy định chính phủ sở hữu không khí trong phòng
C. Chính phủ quy định bạn sở hữu không khí trong phòng
D. A hoặc C

10. Vấn đề liên quan tới 1 sự đầu tư gây ra 1 chi phí cá nhân nhưng tạo ra 1 lợi ích chung, khiến các
cá nhân có xu hướng đầu tư dưới mức mong đợi?
A. Kẻ ăn không
B. Trợ cấp
C. Ngoại ứng mang tính quốc tế
D. Chi phí giao dịch và vấn đề thương lượng

11. Đâu không phải vấn đề cơ bản của kinh tế công cộng?
A. Các thất bại thị trường
B. Vai trò của chính phủ trong việc xóa đói giảm nghèo và tái phân bổ thu nhập
C. Chống buôn lậu
D. B và C
E. C và D

12. Nhược điểm của hệ số Gini?

A. Không định lượng được tình trạng nghèo đói
B. Không định lượng được tình trạng bất bình đẳng
C. Không thể kết hợp hệ số của các vùng miền khác nhau
D. Không có câu nào đúng

13. Thuế Pigou sử dụng tốt nhất khi:

A. Quy mô ngoại ứng lớn
B. Chính phủ không thể trao quyền sở hữu tài nguyên
C. Quyền sở hữu được xác lập rõ ràng và chi phí đàm phán không đáng kể (Coase theorem?)
D. Tất cả các đáp án trên
E. A và B

14. Đâu không là hàng hóa công cộng thuần túy?

A. Nước biển
B. Không khí trong lành
C. Nước khoáng thiên nhiên
D. Quốc phòng

15. Đâu không là hàng hóa công cộng không thuần túy?
A. Phố dành cho người đi bộ
B. Quốc phòng
C. Đường cao tốc
D. Tín hiệu truyền hình cáp

16. Đường Lorenz là công cụ đề?

A. Đo lường sự nghèo đói
B. Đo lường tình trạng độc quyền
C. Đo lường hệ số co giãn về cầu
D. Không có đáp án nào đúng

17. Đánh thuế người sản xuất tạo ra ngoại ứng dựa vào tổng ngoại ứng tạo ra sẽ bằng với?
A. Phần chi phí đầu vào tăng lên của người sản xuất
B. Phần trợ cấp cho những ai ngoài thị trường
C. Phần thặng dư tăng thêm của người tiêu dùng trên thị trường
D. B và C

18. Khi có ngoại ứng trong tiêu dùng, ___ sản phẩm được sản xuất so với mức hiệu quả xã hội:
A. Quá nhiều
B. Quá it
C. Một lượng hiệu quả
D. Tất cả đều đúng

19. Chính phủ trả cho doanh nghiệp hay một cá nhân một khoản, làm giảm chi phí tiêu dùng hoặc
sản xuất đối với loại sản phẩm đó, liên quan đến vấn đề?
A. Bồi thường Coase
B. Kẻ ăn không
C. Trợ cấp
D. Thuế Pigou

20. Sơn định giá $5 với hàng hóa công cộng đơn vị số 4, Ngọc định giá $4 với hàng hóa công cộng
đơn vị số 5. Tính mức xã hội sẵn sàng chi trả cho hàng hóa công cộng đơn vị số 5?
A. $3
B. $5
C. $8
D. Không có câu nào đúng
T/F and explanation
X study again - X (maybe) not related to lesson/not studied yet

1. Markets that are provided inefficiently by the public sector are called market failures → T

2. When there is asymmetric information, buyers or sellers can change market supply and
demand → T

3. The negative externality in consumption makes the private MB curve below the social MB
curve → F. MSB is below MPB

4. Monopoly's excess profits will decrease when the government intervenes to set prices by AC
→

5. The higher the Gini coefficient, the more poverty increases → F. The higher the Gini, the
higher the level of inequality

6. The object of study of the public economy is the government's micro-problems → F. The
object of study of public economics is government policy through the lens of economic
efficiency and economic equity (?)

7. Hàng hóa phi khuyến dụng (Demerit goods) are not pure public goods (?) → T. Demerit goods
are goods having negative impacts on consumption or production. They have these two
characteristics: Harmful, unhealthy to the individual consumer. Also, they usually have
negative externalities. (Eg: alcohol, tobacco)

8. Adverse selection occurs when asymmetric information occurs before the transaction is made
→ T. Adverse selection happens when a seller has more information about a product than
buyer, or vice versa, in a way that the informed side adversely affects the uninformed side.
Adverse selection occurs before the transaction is made

9. The Gini coefficient is used to measure poverty, the larger the coefficient, the higher the
poverty level → F. Gini is used to measure inequality. The larger the coefficient, the higher the
inequality level.

10. When the government sets the price by average cost, the monopolist will lose the excess
profit → F. When the government sets the price by marginal cost, the monopolist will lose
excess profit. (PC: P=MR=MC; Mono: P>MR, MR=MC)

11. Government quota intervention makes markets more efficient → T. Quota can prevent
overproduction than socially optimum level.

12. Stemair 0.04% sea salt is a non-pure public good (?)

13. The Lorenz curve is an effective tool for comparing inequality across countries, it can be
concave or straight in shape. → T

14. Population growth makes it difficult for the government to provide public goods → T. At very
low density levels, increased population density lowers costs of providing services such as
police protection. But beyond very low levels of density, as density goes up, so do costs to
 government. Rapid population growth also imposes costs on the local population through
lower service levels.

15. Merit goods are not pure public goods → T. Merit goods are commodities that the public
sector provides free or cheaply because the government wishes to encourage their
consumption (it is now under-consumed). Merit goods result in positive externalities

16. The main cause of natural monopoly is the law on intellectual property → T. Main cause: trade
barrier to entry, intellectual property, economies of scale

17. When the government sets the level of P=MC, the profit of the monopoly decreases → T

18. Public goods are usually efficiently allocated without government intervention. → F

19. According to Rawls Theory, government policies should be aimed at maximizing the sum of
utility of everyone in society. → F. Social welfare depend only on the benefit of the poorest. =>
max social welfare = max utility of the poorest.

20. The invisible hand of the marketplace acts to allocate resources efficiently, but it does not
necessarily ensure that resources are allocated fairly. → T

21. When a good is taxed, the tax revenue collected by the government equals the decrease in
the welfare of buyers and sellers caused by the tax. → F. Decrease in the loss of welfare. At
the socially optimum level, tax is equal MEC - marginal external cost or MD - marginal
damage.

22. Government programs that take money from high-income people and give it to low-income
people typically improve economic efficiency by reducing poverty.

23. Minimum wage laws reduce poverty by reducing unemployment. → F. Minimum wage laws
reduce poverty by reducing income inequality (?)

24. Government intervention will make the market become more efficient → T. Government
intervention is helpful when the market suffers from market failure, externalities, inequality,
etc.

25. All remedies for externalities share the goal of moving the allocation of resources toward the
market equilibrium → F. Moving the allocation of resources toward socially optimum level

26. Knowledge is a good example of a common resource. → F. Knowledge is not common

resource. The common resource includes goods that are rivalrous and non-excludable and
can be congested or depleted but are accessible to everyone.

27. The patent system gives firms greater incentive to engage in research and other activities
that advance technology. → T. Encourage firms to enhance competitive advantage through
research and development of advanced techonoloy

28. Economists believe that the optimal level of pollution is zero. → F. Optimal level of pollution is
the socially optimum level where marginal social benefit equals marginal social cost.

29. Firms often do not provide enough information about their products, causing asymmetric
information → T. The term imperfect information simply means that the buyers and/or sellers
do not have all the information necessary to make an informed decision. Asymmetric
information is the condition where one party, either the buyer or the seller, has more
information about the product's quality or price than the other party

30. Merit goods cause positive externalities, so consumers often do not use them → F. Merit
goods are goods that are socially desirable but under-produced or under-consumed

31. The negative externality in consumption causes the MPB curve to lie below the MSC → T
32. "Modern governments often have to trade-off between efficiency and equity goals when
implementing interventionist policies such as taxes and subsidies" → T. Government
policymakers face a trade off problem between efficiency and equity, for example, if they
increase the rrrincome of the poor by taking a substantial part from the income of the rich.

33. "The public sector often tends to expand in size to enhance operational efficiency" → F. Public
sector can expand or narrow in size, for example, subsidize or impose a tax, to achieve social
efficiency.

34. "Sometimes without government intervention, the market corrects itself for market failures
caused by externalities" → T. Parties can privately negotiate or agree to limit consumption or
production among themselves to correct the market failure of the tragedy of the commons (a
problem when individuals neglect the well-being of society in the pursuit of personal gain)

35. "Effective government intervention is a public good" → F (?)

36. Public economics may be called "Economics of the Government" → T. Economic science deals
with the government intervention in the market economy in order to enhance economic
efficiency and economic equity Economics of the government

37. Despite the appealing logic of the Coase theorem, private sectors often fail to resolve the
problems caused by externalities on their own. → T. Although parties can privately agree or
negotiate to limit consumption or production among themselves, there are still some
problems such as

- assignment problems (difficult to truly assign blame)

- free-rider problems (some individuals are allowed to consume more than their fair
share of the shared resource or pay less than their fair share of the costs)

- hold-out problems (property rights in question are held by more than one party)

38. A competitive market will always be more efficient in the allocation of resources than a
market dominated by a few big suppliers/firms → False. Because in competitive price P=MC,
there is no deadweight loss; however, in some specific situation such as asymmetric
information there will be deadweight loss. Therefore, it is not ALWAYS true.

39. When there is price discrimination the monopoly will get a maximum profit → F. Monopolist
firm maximizes profit when P>MR and MR=MC

40. Monopolists can achieve any level of profit they desire because they have unlimited market
power → False. The firm faces with scarcity (market resources…) so that they cannot change
immediately the capacity to provide the market / Another way to explain: monopolists
maximize profit when MR=MC so that they cannot achieve optimal profit at any other level

41. Comparing a monopoly and a competitive firm, the monopolist will produce more at a higher
price → produce less at a higher price

42. Public goods are usually efficiently allocated in the market economy.

43. When the price equals average total cost, the natural monopoly will suffer from lost.

44. The invisible hand of the marketplace acts to allocate resources efficiently and it ensures that
resources are fairly allocated

45. The Gini coefficient of country A is 0.345 and the Gini coefficient of country B is 0.453 so we
could say that the poverty situation in country A is worse than the poverty in country B

46. Externalities lead markets to produce a smaller quantity of a good than is socially desirable.

47. Government programs that take money from high-income people and give it to low-income
people typically improve economic efficiency by reducing poverty.
Calculating exercises
Monopoly
M1. A monopolist has a total cost function C(q)=500+2.5Q and a demand function P=100-2.5Q where
P is price and Q is output. Use this information to calculate
a. The profit-maximizing price and the quantity
b. The maximized profit of the monopolist
c. If with government intervention, the monopolist must price as MC, calculate the profit of this firm
and the welfare of the society
d. Calculate the deadweight loss (welfare loss) and the loss in CS under monopoly relative to the
case of best welfare outcome
Externality
E1.
Suppose there is a market of steel with
Qs=10P-270
Qd= - 2P+150 (Q: ton; P: million VND/ton)
The production of steel creates the external cost to the citizen, which is represented by MD curve:
P=3
a. Calculate the efficient quantity for the market and the efficient quantity for the society
b. Calculate the DWL when there is no government intervention
c. When the efficient social quantity is achieved, count the loss in CS and the loss in PS.
Recheck your answers with MD=0.1Q

E2. (19-20)
Suppose there is a market regarding the production of zinc ore in a country as follows:
P(S)=120+6Q P(D)=450-4Q
The marginal external losses caused by zinc ore production are depicted by the MD=0.5Q
Unit of measurement: tons, unit of price: million VND/ton
a. Calculate the private efficient zinc ore output and the socially efficient output level
b. Calculating the social welfare loss caused by private sector zinc production
c. Calculate the sum of the external losses incurred by third parties when producing zinc ore at
market output, and calculate the share of producer and consumer surplus loss from
producing at the socially efficient level of output.
d. Calculate the total tax collected by the state when producing at the socially efficient level of
output

E3. Negative externalities in consumption. Given a table of data to write the equations for the supply
and demand curves
(S) P=0.4Q+6
(D) P= -0.3Q+33
MEC=0.1Q
a. Calculate market Q and social Q
b. Calculate DWL
c. Calculate the total tax payable to the government
d. The cost that a third person must compensate tobacco consumers for Q=Q society

E4.
Suppose that there is a market of alcohol as follows:
Qd= 120-4P; Qs= 3P+60.
The consumption of alcohol create negative externality that is represented by MD=Q/4.
a. Calculate the market quantity and the social quantity
b. Calculate the DWL caused by negative externality. Illustrate it by graph
c. If the government intervenes by Pigou tax to get the social efficient quantity, count the total
tax collected by the Government
d. Describe your results by graph

E5.
D: 40-2Q
S: 25+3Q
MEB=10 positive consumption externalities
a) Calculate market quantity and social quantity
b) Pigou subsidy. Calculate subsidy quantity
c) Calculate DWL
d) Draw the graph

E6.
Qs=20Ps-460
Qd= -4Pd+320
MD=MEC=0.25Q
a. Calculate market quantity. CS? PS?
 b. Calculate social optimal quantity. DWL when produce at market quantity?
c. Calculate the change in welfare loss of the third party when the producer reduces production
from market quantity to socially optimum quantity
d. Government intervenes by using the Pigouvian tax. Calculate total tax collected

E7. (minitest)
Public goods
Two consumers of a pure public good have a demand function
P1=150-1.5Q P2=150-1.25Q MC=100
a. Calculate the efficient level of output and social welfare
b. Calculate the individual level of output and the corresponding welfare
c. If the government provides that public good, what is the total tax payable by each
individual?
d. Draw illustrations
Poverty, Inequality and Redistribution policy
I1.
(2 pts) Given household income as follows: 1; 3; 3.5; 6; 11; 12; 13; 15; 19; 22 (million VND/month)
a. Draw the Lorenz line and calculate the Gini . coefficient
b. Poverty threshold = 6 million VND. Calculate the head count index, squared the poverty interval,
and the average poverty interval
c. The government applies progressive tax: 0% tax rate with income from 0-3 million, 5% with 3-6
million, 9% with 6-11 million, 13% with >11 million. Calculate the total tax collected by the government
d. The government reallocates income on an equal average basis. Through the Gini coefficient
evaluates the level of inequality compared to before
I2.
Household 1 2 3 4 5 6 7 8 9 10

Permanent income/month
3 10 2 7 4 8 15 12 4 9
in million VND
a. Draw the Lorenz curve. What could be your remark?
b. Count the Gini coefficient
 c. Count the Kuznet ratio (with x=40; y=20)

I3.
For income of 10 households: 1,2,3,6,7,8,9,16,18,20
a. Draw Lorenz line, calculate Gini . coefficient
b. Poverty threshold=6. Calculate the total poverty interval, the average poverty interval, the square
of the poverty interval

I4.. For households whose income is: 400, 500, 700, 930, 1000, 1124, 1200, 1600, 1270, 1100. The
absolute poverty level is 1000.
a. Calculate the Gini coefficient.
b. Assume that each household in the 2 highest income quintiles must give each of the 2 lowest
quintiles 100. Calculate the total poverty gap before and after income redistribution.

I5.
Suppose that there is a population sample of 10 persons with relative permanent incomes as follows
3, 13, 9, 15, 5, 3, 25. 16, 7, 10.
a. Show the table of the size distribution of income — by quintiles
b. Draw the Lorenz curve. What are your remarks about the inequality situation?
c. Count the Gini coefficient and give some remarks.
d. Suppose that there is a PIT law applied for permanent income as follows: income from 0-5=> tax
rate =5%:
income from higher than 5 to 10, tax rate = 10%,
income from higher than 10 to15, tax rate =15%,
income higher than 15, tax rate =20%.
Count the total tax collected by the government

I6.
Given a country of 10 citizens, with the following income distribution: 22, 15, 7, 9, 2, 16, 20, 3, 5, 6
(hundred USD/month)
a. Show the table size of distribution of income by quintile
b. Draw the Lorenz curve
c. Calculate the Gini coefficient
d. Assume poverty line = 7. Calculate the headcount index, total poverty gap, average poverty
gap, squared poverty gap
e. The government taxes personal income:
0 - 500: 5%
>500 - 1000: 10%
>1000 - 1500: 15%
>1500 - 2000: 20%
>2000: 27%
Calculate: total tax collected by the government, MTR (marginal tax rate), ATR (average tax
rate)
I7.

Public choice, Logrolling

1. Given 3 groups of voters
ND HT CN
Build a nursing center -10 100 -20
Buy agricultural machinery 60 -20 -10
Improve worker skills -20 -30 125
a. Biểu quyết bằng cho điểm căn cứ lợi ích tổn thất nhận về thì dự án nào được thông qua (Which
project will pass if vote based on net profit or loss received?)
b. Biểu quyết theo đa số lấy phiếu bầu yes no thì dự án nào được thông qua (Which project will pass
in case of majority voting?)
c. Liên minh thì dự án nào thắng cử. Tác động thế nào đến phúc lợi xã hội (Which project will pass if
logrolling is allowed? Effects on social welfare?)
2. There are 3 individuals A, B, C vote for hiring security guards and fireworks displays. The cost for
each guard and for each fireworks display is 300 thousand dong per week. They agreed that if any
plan is approved, the cost for that option will be divided equally among all three. However, for the
fireworks option, C has MB = 250 thousand dong for 1 week of fireworks display, and both A and 6
have MB equal to 0. As for the option of hiring a quard, only A has MB when a guard is hired is 250
thousands dong, and B and C also have MB=0.
a, ls there any plan adopted on the principle of majority voting and does not allow logrolling?
b, If a logrolling is allowed, how will the voting results change? Is this efficient?
c, If in order to come to an agreement on voting, each participants in the logroiling has to
spend an additional 60 thousands dong called a transaction fee, will the union take place? Why ?
d, If the MB of a fireworks for C is 150 thousands dong and the transaction cost is Zero, will
the logrolling take place or not?
3.
Short essay
1. Analysis of market failures caused by public goods and the direction of government
intervention

- Market failures caused by public goods:

+ Free-rider

+ Overconsumption: inelastic and elastic demand

+ Transaction cost/cost of exclusion: higher than MC

+ Uniform provision: high and low demander

+ User fees

- Government intervention: make public goods non-excludable, subsidize private party,

budget planning for each sector

2. Is there an opinion that: Governments participating in the market often have to choose
between equality and efficiency? Opinion!

- Income inequality between high-skilled and low-skilled labor

- An equity-efficiency tradeoff is when there is some kind of conflict between maximizing

economic efficiency and maximizing the equity (or fairness) of society in some way. When
and if such a tradeoff exists, economists or public policymakers may decide to sacrifice some
amount of economic efficiency for the sake of achieving a more just or equitable society.

- An equity-efficiency tradeoff results when maximizing the efficiency of an economy leads to

a reduction in its equity—as in how equitably its wealth or income is distributed.

3. Show the graphs explaining market failures caused by monopoly: natural monopoly; negative
externalities in consumption and public goods.

4. Analyze with the graph the government intervention in case of market failure caused by
public goods

5. Analysis of the impact of positive externalities and government solutions → pigouvian

subsidy

6. Analysis of market failures caused by negative externalities in consumption and government

interventions → Pigouvian tax. There are illustrative graphs

7. What is lobbying? In a market economy, what are the positives and negatives of lobbying?
State solutions to limit the negative side of lobbying/Vận động hành lang là gì? Trong nền
kinh tế thị trường, vận động hành lang có mặt tích cực và tiêu cực gì? Nêu giải pháp hạn chế
mặt tiêu cực của vận động hành lang

8. Helen Keller said, "It's hard to get people who have everything to care about people who
have nothing." Your opinion on the above comments.

9. From a public economic point of view, what are the fundamental differences between private
enterprises and state enterprises?

10. Present your opinion on the issue of Covid-19 vaccination from the point of view of the public
economy (effective, fair)
11. Analysis of the effects of government intervention in the market economy, from a public
economic point of view

12. There is an opinion that: "The efforts of the poor can never change the status of classes in
society unless they make a revolution to overthrow the ruling class that is the rich". What is
your public economic opinion on this statement?

13. Balzac commented: "Behind great fortune is a crime". Based on public economic knowledge,
the above comments are made

14. Comment on the issue: "Government officials are not poor, so policies aimed at equity do not
work". State the solution to the above problem.

15. Thomas Fuller (1608 ~ 1661) a famous English churchman and historian said: “Poor man’s
reasons are not heard”. What do you think about these speeches?