Table 10-1 \[\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\ \text { (Units) } \end{array} & \begin{array} { c } \text { Private Value } \\ \text { (Dollars) } \end{array} & \begin{array} { c } \text { Private Cost } \\ \text { (Dollars) } \end{array} & \begin{array} { c } \text { External Cost } \\ \text { (Dollars) } \end{array} \\ \hline 1 & 28 & 12 & 4 \\ \hline 2 & 26 & 14 & 4 \\ \hline 3 & 24 & 16 & 4 \\ \hline 4 & 22 & 18 & 4 \\ \hline 5 & 20 & 20 & 4 \\ \hline 6 & 18 & 22 & 4 \\ \hline 7 & 16 & 24 & 4 \\ \hline \end{array}\] -Refer to Table 10-1. Which of the following statements is correct?

A) If the external cost per unit of output were $0 instead of $4, then the socially efficient quantity of output would be 6 units. B) A tax of $8 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output. C) Taking the external cost into account, total surplus declines when the 5th unit of output is produced and consumed. D) The market for flowers is a market to which the concepts in this table apply very well. A) If the external cost per unit of output were $0 instead of $4, then the socially efficient quantity of output would be 6 units. B) A tax of $8 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output. C) Taking the external cost into account, total surplus declines when the 5th unit of output is produced and consumed. D) The market for flowers is a market to which the concepts in this table apply very well.

Table 10-3 \[\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\ \text { (Units) } \end{array} & \begin{array} { c } \text { Private Value } \\ \text { (Dollars) } \end{array} & \begin{array} { c } \text { Private Cost } \\ \text { (Dollars) } \end{array} & \begin{array} { c } \text { External Benefit } \\ \text { (Dollars) } \end{array} \\ \hline 1 & 22 & 12 & 10 \\ \hline 2 & 20 & 15 & 10 \\ \hline 3 & 18 & 18 & 10 \\ \hline 4 & 16 & 21 & 10 \\ \hline 5 & 14 & 24 & 10 \\ \hline 6 & 12 & 27 & 10 \\ \hline \end{array}\] -Refer to Table 10-3. The social value of the 4th unit of output that is produced is

A) $10. B) $16. C) $26. D) $30. A) $10. B) $16. C) $26. D) $30.

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following: F1F1F1S1F1F1F10F1F1F1S1F1F1F10a private cost of $2.83; F1F1F1S1F1F1F10F1F1F1S1F1F1F10a social cost of $3.12; F1F1F1S1F1F1F10F1F1F1S1F1F1F10a value to consumers of $3.23. -Refer to Scenario 10-1. From the given information, it is apparent that

A) the production of gasoline involves a negative externality, so the market will produce a smaller quantity of gasoline than is socially desirable. B) the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable. C) the production of gasoline involves a positive externality, so the market will produce a smaller quantity of gasoline than is socially desirable. D) the production of gasoline involves a positive externality, so the market will produce a larger quantity of gasoline than is socially desirable. A) the production of gasoline involves a negative externality, so the market will produce a smaller quantity of gasoline than is socially desirable. B) the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable. C) the production of gasoline involves a positive externality, so the market will produce a smaller quantity of gasoline than is socially desirable. D) the production of gasoline involves a positive externality, so the market will produce a larger quantity of gasoline than is socially desirable.

Exam 10: Externalities

Scenario 10-4 The demand curve for fire extinguishers slopes downward and the supply curve for fire extinguishers slopes upward. The production of the 500^th fire extinguisher entails the following: • a private cost of $10; • an external cost of $0; • a private value of $9; • an external benefit of $3. -Refer to Scenario 10-4. Is the market-equilibrium quantity of fire extinguishers less than, equal to, or greater than 500? Explain.

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Question 101

Figure 10-5 -Refer to Figure 10-5. Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is

(Multiple Choice)

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Question 102

Figure 10-5 -Refer to Figure 10-5. The graph represents a market in which

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Question 103

Some government policies provide incentives for private decision makers to choose to solve the problem of externalities on their own. What term do we use to describe such policies?

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Question 104

Figure 10-6 -Refer to Figure 10-6. Each unit of plastics that is produced results in an external

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Question 105

Table 10-1 Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Cost (Dollars) 1 28 12 4 2 26 14 4 3 24 16 4 4 22 18 4 5 20 20 4 6 18 22 4 7 16 24 4 -Refer to Table 10-1. Which of the following statements is correct?

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Question 106

Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy.

(True/False)

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Question 107

Table 10-3 Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Benefit (Dollars) 1 22 12 10 2 20 15 10 3 18 18 10 4 16 21 10 5 14 24 10 6 12 27 10 -Refer to Table 10-3. The social value of the 4^th unit of output that is produced is

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Question 108

In some cases, tradable pollution permits may be better than a corrective tax because

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Question 109

Suppose that candy producers create a positive externality equal to $1 per pound of candy. Further suppose that the government offers a $1-per-pound subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of candy?

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Question 110

Suppose the socially-optimal quantity of good x is larger than the market-equilibrium quantity of good x. Does the production of good x convey a positive externality or does it convey a negative externality?

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Question 111

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following: a private cost of $2.83; a social cost of $3.12; a value to consumers of $3.23. -Refer to Scenario 10-1. From the given information, it is apparent that

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Question 112

Bruce engages in an activity that diminishes the well-being of Shawna. Bruce pays no compensation to Shawna for her loss in well-being. What specific term do economists use to describe this situation?

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Question 113

Why are Pigovian taxes preferred to regulatory policies as methods to remedy negative externalities?

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Question 114

A technology spillover is a type of negative externality.

(True/False)

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Question 115

When an externality is present, the market equilibrium is

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Question 116

A corrective tax places a price on the right to pollute.

(True/False)

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Question 117

Figure 10-8 -Refer to Figure 10-8. This market would benefit from a tax equal to $50 per unit.

(True/False)

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Question 118

Patent protection is one way to deal with technology spillovers.

(True/False)

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Question 119

Figure 10-8 -Refer to Figure 10-8. The socially optimal price and quantity are $250 and 250 units, respectively.

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Question 120

Exam 10: Externalities

Figure 10-5 -Refer to Figure 10-5. Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is

Figure 10-5 -Refer to Figure 10-5. The graph represents a market in which

Some government policies provide incentives for private decision makers to choose to solve the problem of externalities on their own. What term do we use to describe such policies?

Figure 10-6 ​ -Refer to Figure 10-6. Each unit of plastics that is produced results in an external

Table 10-1 ​ Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Cost (Dollars) 1 28 12 4 2 26 14 4 3 24 16 4 4 22 18 4 5 20 20 4 6 18 22 4 7 16 24 4 -Refer to Table 10-1. Which of the following statements is correct?

Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy.

Table 10-3 ​ ​ Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Benefit (Dollars) 1 22 12 10 2 20 15 10 3 18 18 10 4 16 21 10 5 14 24 10 6 12 27 10 -Refer to Table 10-3. The social value of the 4th unit of output that is produced is

In some cases, tradable pollution permits may be better than a corrective tax because

Suppose that candy producers create a positive externality equal to $1 per pound of candy. Further suppose that the government offers a $1-per-pound subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of candy?

Suppose the socially-optimal quantity of good x is larger than the market-equilibrium quantity of good x. Does the production of good x convey a positive externality or does it convey a negative externality?

Bruce engages in an activity that diminishes the well-being of Shawna. Bruce pays no compensation to Shawna for her loss in well-being. What specific term do economists use to describe this situation?

Why are Pigovian taxes preferred to regulatory policies as methods to remedy negative externalities?

A technology spillover is a type of negative externality.

When an externality is present, the market equilibrium is

A corrective tax places a price on the right to pollute.

Figure 10-8 ​ -Refer to Figure 10-8. This market would benefit from a tax equal to $50 per unit.

Patent protection is one way to deal with technology spillovers.

Figure 10-8 ​ -Refer to Figure 10-8. The socially optimal price and quantity are $250 and 250 units, respectively.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 10-6 -Refer to Figure 10-6. Each unit of plastics that is produced results in an external

Table 10-1 Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Cost (Dollars) 1 28 12 4 2 26 14 4 3 24 16 4 4 22 18 4 5 20 20 4 6 18 22 4 7 16 24 4 -Refer to Table 10-1. Which of the following statements is correct?

Table 10-3 Quantity (Units) Private Value (Dollars) Private Cost (Dollars) External Benefit (Dollars) 1 22 12 10 2 20 15 10 3 18 18 10 4 16 21 10 5 14 24 10 6 12 27 10 -Refer to Table 10-3. The social value of the 4^th unit of output that is produced is

Figure 10-8 -Refer to Figure 10-8. This market would benefit from a tax equal to $50 per unit.

Figure 10-8 -Refer to Figure 10-8. The socially optimal price and quantity are $250 and 250 units, respectively.