Exam 17: Externalities

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, the equilibrium quantity of steel is ________ tons and the efficient quantity of steel is ________ tons.

Why is it not efficient to eliminate all pollution?

-The demand for bus service is perfectly elastic at a price of $1.25 a ride. The table above shows the bus company's marginal cost and the marginal social cost of the bus service. If the government levies a tax on bus rides so that the bus company takes into account the marginal social cost, the tax will be ________ a ride.

Scientists have said for years cod was so seriously overfished in European Union waters that there was a risk of extinction due to stock collapse. "To ensure this recovery… Ministers agreed a 10 percent cut in days at sea (for North Sea cod)," EU Fisheries Commissioner Joe Borg stated in 2008. What is the goal of this policy?

When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the equilibrium output is ________ of paper.

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal private benefit is

An individual transferable quota can be used to achieve the

A private cost is a cost of production that is

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. If property rights to the pasture are granted to a farmer so that the farmer owns the pasture, the farmer raises

The concept of externalities means that subsidizing education can be justified on the grounds that as a student becomes better educated, the student will

-In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon. When the market for gasoline in Motorland is in equilibrium, the deadweight loss is

Suppose a good has an external benefit and no external cost. When a competitive, unregulated market is at its equilibrium, then the

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, the equilibrium output will be

When individuals make decisions about how much schooling to obtain, they

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant. -In the figure above, if the government gives a voucher equal to $3,000 per year to each college student, how many students will be accepted?

In which of the following cases does the tragedy of the commons occur? I. Cattle grazing on private ranches. II) Catching lobsters off the coast of Florida. III) Raising salmon on salmon farms. IV) Using legal services provided by the courts.

-The above figure shows the marginal benefits and marginal costs of a college education. The efficient number of students is

One way that government can increase the production of goods that have external benefits is to