Exam 16: Externalities

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.At the efficient quantity of pollution,the marginal social cost of pollution is _____ the marginal social benefit of pollution.

Use the following to answer question: Figure: MSB and MSC of Pollution -(Figure: MSB and MSC of Pollution)Use Figure: MSB and MSC of Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.If the current level of pollution is at Q₁,_____ pollution is being emitted because _____.

The economically efficient level of an externality is zero.

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.If 5 acres are dedicated to the park,this outcome is _____ because _____.

(Scenario: Private and External Benefits)Use Scenario: Private and External Benefits.The community estimates the marginal benefit to external parties from lawn upkeep to be $15.Given this information,what is the socially optimal amount of lawn upkeep for this community? Scenario: Private and External Benefits A small community finds that tidy lawns and neighborhoods provide both private and external benefits.They determine that the marginal private benefit (MPB)of lawns can be represented by the equation MPB = 50 - 0.5Q,where Q is the number of hours spent on keeping lawns tidy.The marginal private cost (MPC)of such lawn upkeep is represented by the equation MPC = 0.5Q,where Q is again the number of hours engaged in lawn upkeep.

If external costs exist,the competitive free market:

When individuals take external costs and benefits into account:

Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution,the optimal level of pollution in a society is:

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.If 2 tons of pollution is produced,the marginal social benefit is _____,and the marginal social cost is _____.

Use the following to answer question: Figure: Three Firms That Pollute -(Figure: Three Firms that Pollute)Use Figure: Three Firms That Pollute.If the city imposes a tax of $400 per ton of pollution,firm B will produce _____ tons of mercury,and firm A will produce _____ tons of mercury than will firm C.

Firm A and firm B both produce a good whose manufacture causes pollution,but the firms differ in their marginal benefit from pollution.In this case,an emissions standard would:

With tradable emissions permits,the main problem is determining the _____,while with emissions taxes,the main problem is determining the _____.

If the number of available tradable emissions permits increases,the equilibrium price of the permits _____ and the equilibrium quantity _____.

If drivers decide to make phone calls without considering the costs imposed on others,the:

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 cost will be:

If,at the current amount of pollution,its marginal social benefit is greater than its marginal social cost:

According to the Coase theorem,the private market can achieve an efficient outcome:

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 20 tons,there would be:

The principal government agency in the United States responsible for enforcing national environmental policies is the:

Assume that the price of a tradable emissions permit for a ton of sulfur dioxide is $150.Which statement is INCORRECT?