Exam 10: Externalities

Which of the following statements is correct about a market in which pollution is emitted?

The Coase theorem asserts that, in the presence of externalities,

Which of the following is NOT a way of internalizing technology spillovers?

Two firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air. The government gives each firm 40 pollution permits, which it can either use or sell to the other firm. It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air, and it costs Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air. It is likely that

When the social cost curve is above a product's supply curve,

Corrective taxes are more efficient than regulations for keeping the environment clean.

Suppose that large-scale pork production has the potential to create ground water pollution. Why might this type of pollution be considered an externality?

Table 10-3 -Refer to Table 10-3. The market equilibrium quantity of output is

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

Suppose that flu shots create a positive externality equal to $8 per shot. Further suppose that the government offers a $11-per-shot subsidy to producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced?

​Figure 10-20. ​ -Refer to Figure 10-20. The graph depicts the market for fertilizer. What is the socially optimal quantity of fertilizer?

Once tradable pollution permits have been allocated to firms,

A market for pollution permits can efficiently allocate the right to pollute by using the forces of supply and demand.

Figure 10-5 -Refer to Figure 10-5. Which of the following statements is correct?

Despite the appealing logic of the Coase theorem, private actors often fail to resolve on their own the problems caused by externalities.

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?

When negative externalities are present in a market,

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics. -Refer to Figure 10-13. Each unit of plastics that is produced results in an external

Suppose that a negative externality is created by the production of good X. Which of the following statements is correct?

​A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. If the government offers a per unit subsidy on rain barrels equal to the per-unit externality, then