Exam 4: B: Market Failures: Public Goods and Externalities

Refer to the below diagrams in which figures (a) and (b) show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it.The collective willingness to pay for the 1^st unit of this public good is:

Which of the following is an example of externalities?

If the price of a product increases:

A demand-side market failure occurs when demand curves do not reflect consumers' full willingness to pay for a good or service.

Market failure

Answer the question based on the following information.Way-Below Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism.The university is now considering several alternative levels of crime control.This table shows the expected annual costs and benefits of these alternatives. Based on cost-benefit analysis, Way-Below Normal should undertake

Refer to the below competitive market diagram for product Z.Assume that the current market demand and supply curves for Z are D₂ and S₂.If there are substantial positive externalities associated with the production of Z, it can be argued that:

Positive externalities are likely to cause:

Assume there is no way to prevent someone from using an inter-provincial highway, regardless of whether or not he or she helps pay for it.This characteristic is associated with:

Demand-side market failure

Refer to the information below.Which of the following policies would be most appropriate for dealing with this problem? It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river.Operators of hydroelectric generating plants on the river find that they must clean up the river's water before it flows through their equipment.

Which is a characteristic of a public good?

Market failures

The following information is for four highway programs of increasing scope.All figures are in millions of dollars.On the basis of the data we can say that:

When the government of a country levies a tax to correct a negative externality, it is often referred to as:

Refer to the information below: A government is considering undertaking one or more construction project(s).The estimated marginal costs and benefits of each project are given in the above table.What is the total amount that the government should spend on construction project?

From society's perspective, if MB₁ and MC₂ are relevant:

The right and efficient amount of a public good will be produced when:

The market demand curve for a public good:

By levying taxes on households and businesses, governments: