Exam 17: Externalities

Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table: The marginal external cost associated with the production of unit 3 is

-The table above shows costs and benefits arising from college education. There is no government involvement and the schools are competitive. a) Draw the marginal social cost, marginal private benefit, and marginal social benefit curves. b) How many students are enrolled and what is the tuition? c) What is the efficient level of enrollment? d) What is the deadweight loss? Why does it arise? e) If the government provides the efficient amount of education, how many school places does it offer and what is the tuition? Explain your answer. f) If the government provides the efficient amount of education, of the tuition paid by a student what does the government pay and what does what a student pay?

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city. If the marginal external cost is $10 per ton at every quantity of steel produced, the equilibrium quantity when the steel industry is unregulated is ________ tons per week.

-The table above shows the marginal costs and marginal benefits of college education. With public provision of the efficient amount of college education, the cost paid by the taxpayers is

With the debris of more than 50 years of climbing on the beautiful high slopes - oxygen canisters, tents, backpacks and even some bodies - Mount Everest has been called the world's highest garbage dump. Currently climbers must pay only a $3,000 trash-collection fee, which is woefully less than the actual cost of collecting trash. If climbers had to pay a higher trash-collection fee, the use of this common resource would

With marketable permits to pollute, efficiency can be obtained if

For a good with an external cost, the supply curve

The marginal cost of production that is borne by the entire society is the

-In the figure above, if a tax is imposed that generates an efficient allocation of resources, then consumers will pay a price of

-The table above shows the marginal costs and marginal benefits of college education. The marginal social benefit of college education at the efficient amount of enrollment is

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. Without regulation, ________ tons of paper will be produced and the price will be ________ per ton.

When external benefits exist, which of the following can produce the efficient amount of output? I. vouchers II) private subsidies III) taxes IV) marketable permits

-The amount of the external marginal cost per ton illustrated in the above figure is

-In the figure above, if no one owns the lake the tax that achieves the efficient outcome is ________ per ton of pesticide produced.

When people determine the quantity of education they will undertake, they ________ the external benefits. As a result, if education were left to an unregulated market, people would undertake too ________ education.

The ________ is the cost of paid by the producer plus any cost paid by everyone else when another unit of a good or service is produced.

-In the above table, the efficient level of output can be achieved through a per unit

A cost that arises from the production of a good that is paid by someone who did not participate in the production is called

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

-In the figure above, if the market is unregulated, the price will be