Exam 16: Externalities

With tradable emissions permits,the price of the permit is determined by:

An emissions tax will:

A plastics manufacturing plant dumps pollution into the Big River.This pollution leads to higher costs and disruption for fishermen on the river,for which they are not compensated.In this situation:

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.The socially optimal quantity of pollution is _____ tons.

A principal cause of market failure is actions generating side effects on nonmarket participants that are not properly taken into account by the market.

There are benefits resulting indirectly from pollution because:

Use the following to answer question: Figure: The Socially Optimal Quantity of Pollution -(Figure: The Socially Optimal Quantity of Pollution)Use Figure: The Socially Optimal Quantity of Pollution.In the figure,firms are the only beneficiaries of pollution,and costs are borne solely by others in the society.The optimal level of pollution is:

Use the following to answer question: Figure: City with Two Polluters -(Figure: City with Two Polluters)Use Figure: City with Two Polluters.If the government does not intervene in the pollution market,equilibrium will occur where firm A produces _____ tons of pollution and firm B produces _____ tons of pollution,for a total of _____ tons.

If a good that involves external costs is priced to take these costs into account,then its price will likely:

Whenever human activity generates a concentration of a substance in the environment sufficient to cause harm to living things,it is called:

If the marginal social benefit received from pollution is equal to its marginal social cost:

Suppose the federal government determines the total level of municipal sewage that can be discharged by cities along a river.If the cities are able to buy and sell rights to the total discharge level among themselves,then the government's environmental policy includes:

An external benefit is a:

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.Without government intervention,this market will produce _____ units at a price of _____.

Use the following to answer question: Figure: The Socially Optimal Quantity of Pollution -(Figure: The Socially Optimal Quantity of Pollution)Use Figure: The Socially Optimal Quantity of Pollution.In the figure,firms are the only beneficiaries of pollution,and costs are borne solely by others in the society.Without government intervention:

Use the following to answer question: -(Table: Coal Mine Pollution)Use Table: Coal Mine Pollution.The table shows the marginal social benefit and cost of various amounts of pollution from a coal mine.The efficient quantity of pollution is _____ tons.

Use the following to answer question: -(Table: Externalities from Parks)Use: Table: Externalities from Parks.The table shows the marginal social benefit and the marginal social cost of preserving various amounts of land in a city for a public park.Suppose that parks result in positive benefits to the community as a whole but that the marginal private benefit that any one individual in the community gets from parks is close to 0.At the socially optimum amount of land dedicated to the public park,the marginal social benefit will be:

Suppose that government officials have set an emissions tax to reduce pollution.Assume that the optimal tax would be $1,500,but government officials have set the tax at $500.At the equilibrium with the $500 tax:

When farmers raise hogs,there are a number of external costs.In particular,hogs generate methane gas.If the marginal external cost is $100 per hog and the government imposes a tax of $200 per hog,then at the equilibrium price and quantity of hogs:

Use the following to answer question: -(Table: Coal Mine Pollution)Use Table: Coal Mine Pollution.The table shows the marginal social benefit and cost of various amounts of pollution from a coal mine.Suppose that the marginal cost from the production process itself (to the producer)is 0.The market-determined quantity of pollution is _____ tons.