Exam 16: Externalities

Use the following to answer questions: Figure: Efficiency and Pollution -(Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution. In the absence of government intervention, the marginal social cost of pollution will exceed the marginal benefit of pollution by:

Use the following to answer questions: Figure: Model of a Competitive Market -(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if there are external costs:

Whenever human activity generates a concentration of a substance in the environment sufficient to cause harm to living things, it is called:

Use the following to answer questions: Figure: Marginal Private Benefits and Marginal Social Benefits -(Figure: Marginal Private Benefits and Marginal Social Benefits) Look at the figure Marginal Private Benefits and Marginal Social Benefits. Without government intervention, this market will produce _____ units at a price of _____.

Suppose government officials have set an emissions tax to reduce pollution. Assume the optimal tax would be $500 but government officials have set the tax at $900. At the equilibrium with the $900 tax:

A plastics manufacturing plant dumps pollution into the Big River. This leads to higher costs and disruption for fishermen on the river, for which they are not compensated. In this situation:

Tony has a cell phone, and his service provider is Verizon. When he calls his wife, Meleah, another Verizon customer, he does not have to pay for those minutes. The more Verizon customers there are in the market, the more benefit Tony receives. This is:

If externalities are fully internalized, an outcome is efficient even without government intervention.

Use the following to answer questions: Figure: MSB and MSC of Pollution -(Figure: MSB and MSC of Pollution) Look at the figure MSB and MSC of Pollution. Suppose pollution is unregulated. What level of emissions tax would move the level of pollution to the socially optimal level?

Use the following to answer questions: Figure: Three Firms That Pollute -(Figure: Three Firms that Pollute) Look at the figure Three Firms That Pollute. If each company is allowed to emit only 300 tons of pollution per day, which company will be most adversely affected?

Since talking while driving generates a negative externality, banning talking while driving would be economically efficient.

Tradable pollution permits are a(n):

If a good that involves external costs is priced to take these costs into account, then its price will:

Firm A and firm B both produce a good whose manufacture causes pollution, but the firms differ in their marginal benefit from pollution. In this case, an emissions standard would:

Economists and environmentalists agree that pollution is undesirable and that government policy should aim to achieve a zero-pollution society.

Use the following to answer questions: -(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. If 2 tons of pollution is produced, the marginal social benefit is _____, and the marginal social cost is _____.

All of the following are examples of an external cost EXCEPT:

An externality is said to exist when:

Which of the following is an environmental policy based on tradable emission permits?

The Coase theorem states that in the presence of externalities, a market economy will: