Exam 16: Externalities, Public Goods, and Social Choice

Explain why cable television is not a pure private good.

What does it mean for a good to be non-rival in consumption?

Economists often refer to taxes, subsidies, legal rules, and public auctions as methods of indirect regulation. Explain what this means and what are its limitations.

In what way can liability rules lead to a more efficient outcome?

What three conditions must be satisfied in order for the Coase theorem to work?

Dick has a dog (Spot) that likes to bark at night. Jane, who lives next door to Dick, must be at work every morning by six o'clock. Suppose that there is a noise ordinance that requires Dick to keep his dog quiet. Is there any Coase solution to this problem that does not involve calling the police? Explain.

How do taxes work to reduce a negative externality? Explain in detail.

What is an injunction?

Dick has a dog (Spot) that likes to bark at night. Jane, who lives next door to Dick, must be at work every morning by six o'clock. Suppose that there is no noise ordinance that requires Dick to keep his dog quiet. Is there any Coase solution to this problem? Explain.

What is the drop-in-the-bucket problem?

Critically evaluate the following statement. "Automobile manufacturers continue to produce cars that are dangerous. Therefore the industry should be considered as a market failure and safety mandates should be imposed by the government to insure that all cars are completely safe."

Some states require that unions represent non-union workers who don't pay dues in their collective bargaining negotiations. Explain using economic logic how this might result in fewer unions than would otherwise be the case if these types of laws did not exist.

Comment on the following statement: "Taxes on externality-producing activities are generally used to eliminate externalities."

What is a public good?