Exam 16: Externalities

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.An optimal Pigouvian tax of _____ per ton of pollution can move this market to the socially optimal quantity 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.Suppose pollution is unregulated.What level of emissions tax would move the level of pollution to the socially optimal level?

To encourage consumption of a good that generates positive externalities,the BEST option for policymakers would be to:

Use the following to answer question: Figure: Model of a Competitive Market -(Figure: Model of a Competitive Market)Use Figure: Model of a Competitive Market.Given the figure,if there are external costs,a tax imposed on sellers will:

A good is subject to a network externality when:

Which example illustrates a policy solution to inefficiency in the free market caused by the stated externality?

Use the following to answer question: Figure: Three Firms That Pollute -(Figure: Three Firms that Pollute)Use Figure: Three Firms That Pollute.If each company is allowed to emit only 300 tons of pollution per day,which company will be MOST adversely affected?

If the marginal social benefit received from pollution is less than its marginal social cost:

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.At the market-determined quantity of pollution,the marginal social benefit of pollution is:

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 quantity of pollution could be achieved:

An advantage of tradable emissions permits is that:

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 issued licenses to emit a total of 1,600 tons of pollution,the market price to emit 1 ton of pollution would equal:

Flu vaccines often provide both private benefits to individuals and positive external benefits to other members of society.As a result,without government intervention,one would find:

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.Without government intervention,at the amount of land dedicated to the public park the marginal social cost will be:

Both emissions taxes and tradable emissions permits:

Suppose that each person in a community had to pay for his or her own education from kindergarten through high school.One would expect that:

Use the following to answer question: -(Table: Externalities from Parks)Use: Table: Externalities from Parks.The 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.Without government intervention,the amount of land dedicated to the public park will be _____ acres.

A market economy will produce _____ without any government regulation.

A copper mining operation discharges waste products into a river and causes higher costs and discomfort to downstream users of the water for which they are not compensated.In this case:

A Pigouvian subsidy is: