Exam 10: Externalities

Does the restoration of historic buildings create a positive externality or does it create a negative externality?

Some policies toward externalities provide incentives so that private decision makers will choose to solve the problem on their own. What name do we use for these types of policies?

Which of the following statements is correct?

Figure 10-9 -Refer to Figure 10-9, Panel (b) and Panel (c). Which of the following is correct?

In markets, the invisible hand allocates resources efficiently

When the government intervenes in markets with externalities, it does so in order to

When producers operate in a market characterized by negative externalities, a tax that forces them to internalize the externality will

Suppose a subsidy is offered to consumers of education as a means of internalizing the externalities associated with education. If the subsidy accurately reflects the external benefits of education, then the new demand curve for education coincides with which other curve?

The difference between a corrective tax and a tradable pollution permit is that

Table 10-5 The following table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67. -Refer to Table 10-5. If the government wanted to eliminate exactly 11 units of pollution, which of the following fees per unit of pollution would achieve that goal?

Private markets fail to reach a socially optimal equilibrium when negative externalities are present because

Figure 10-19 -Refer to Figure 10-19. Each additional unit of the good that is produced yields an external benefit of

Figure 10-11 -Refer to Figure 10-11. Which of the following magnitudes is constant over all units of output?

Figure 10-2. The graph depicts the market for plastic. -Refer to Figure 10-2. The private value of the 200^th unit of plastic exceeds the social cost of the 200^th unit of plastic by

Figure 10-10 -Refer to Figure 10-10. The graph represents a market in which

Ty lives in an apartment building and gets a benefit from playing his stereo. Olivia, who lives next door to Ty and often loses sleep due to the loud music coming from Ty's stereo, bears a cost from the noise. Olivia is threatening to call the police to force Ty to turn down his stereo. Under which of the following conditions would Ty be able to offer Olivia some amount of money to keep her from calling the police and to allow him to continue to play his stereo loudly?

If we know that the demand curve for good x fails to reflect the total value to society of that good, then we know that

Figure 10-2. The graph depicts the market for plastic. -Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, what price will the firm charge per unit of plastic?

Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that

Economists believe that the optimal level of pollution is zero.