Exam 15: Public Goods, Externalities, and Government Behavior

On which of the following goods or services would the imposition of a government subsidy most likely result in more efficient allocation of our nation's resources?

Tradable permits are a new idea but are likely to be an increasingly common method of reducing pollution in the future.

With tradable permits, the total amount of pollution in the economy is

Use the following set of preferences (table below) for Jon, Jeff, and Amy on travel options to show the paradox of voting.

Goods that exhibit nonrivalry in consumption and nonexcludability create a(n)

A lighthouse has the feature of rivalry.

Externalities have become international in recent years, paralleling the growth of international trade and finance.

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One possible reason for government inefficiency is that there is no profit motive in government to discipline government managers and employees.

A public good exhibits nonrivalry in consumption and is nonexcludable.

When the government uses a subsidy in the case of a positive externality, it sets the subsidy equal to the

How is technology changing the public good features of television broadcasting?

A user fee can be used to solve the free-rider problem if the good is totally nonexcludable.

Radio and television broadcasting services in the United States partially avoid a free-rider problem by

If burning coal creates a pollution externality, the government may impose a

If a good incurs a negative externality, then the socially desirable output level can be reached by

One form of government intervention to solve externalities is

Exhibit 15-2 -In the case of negative externalities, a competitive market may not generate an efficient amount of production.

A subsidy on a good with a positive externality reduces the marginal social benefits.

Unlike command and control, taxes and subsidies allow firms to