Exam 16: Externalities

Use the following to answer question: Figure: Three Firms That Pollute -(Figure: Three Firms that Pollute)Use Figure: Three Firms That Pollute.In the figure,at what tax rate would firm C produce positive amount of pollution?

Use the following to answer question: Figure: Marginal Private Benefits and Marginal Social Benefits -(Figure: Marginal Private Benefits and Marginal Social Benefits)Use Figure: Marginal Private Benefits and Marginal Social Benefits.One way for the government to achieve this socially optimal level is by:

Suppose that government officials have set an emissions tax to reduce pollution.Assume that the optimal tax would be $500,but government officials have set the tax at $900.At the equilibrium with the $900 tax:

If the marginal social benefit received from pollution is greater than its marginal social cost in a market:

When innovations by one firm are quickly emulated and improved on by rival firms in the same industry or in other industries,it is:

When the government attempts to reduce climate change by establishing a minimum level of fuel efficiency on new cars,it is using a(n):

Use the following to answer question: Figure: Efficiency and Pollution -(Figure: Efficiency and Pollution)Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.If the government imposed an environmental standard that did NOT allow the quantity of pollution to exceed 30 tons,there would be:

Use the following to answer question: Figure: Marginal Private Benefits and Marginal Social Benefits -(Figure: Marginal Private Benefits and Marginal Social Benefits)Use Figure: Marginal Private Benefits and Marginal Social Benefits.If government does intervene and encourages the market to produce and price at the socially optimal level,what will be the output and price?

Suppose that government officials have set an emissions tax to reduce pollution.Further suppose that,with the emissions tax,the marginal social cost of pollution exceeds the marginal social benefit of pollution.The emissions tax is:

Pollution has _____ and _____.

A familiar example of a negative externality is loud music on a college campus.In principle,it should be possible to internalize this externality by permitting students to negotiate rights to play music during particular times.The most likely reason that these negotiations do NOT happen is that:

The marginal social cost of pollution rises as the quantity of pollution emissions:

An externality is said to exist when:

Which activity generates a negative externality?

According to the Coase theorem,only when transaction costs are extremely high can two parties internalize a negative externality.

If an activity generates external costs,the decision makers generating the activity will:

Tradable pollution permits are a:

Use the following to answer question: Figure: Pollution and Efficiency -(Figure: Pollution and Efficiency)Use Figure: Pollution and Efficiency.In this market,in which sulfur emissions are a result of production,if _____ units of emissions are produced,then _____.

Which activity does NOT generate a negative externality?

Activities that generate external costs will likely be carried out at levels that _____ those that would be efficient.