Exam 17: Externalities

A government subsidy for a good

If property rights for air and water exist, then polluters bear the costs of pollution.

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. The competitive equilibrium is at

If production of a good creates an external cost, the amount of output where the marginal social benefit equals the marginal private cost is

Why should people without children pay some tax to support local schools?

In the absence of property rights, factories will dump waste into a waterway up to the point where ________ equals ________.

-In the above figure, if a subsidy is granted to producers that generates an efficient level of production, then the deadweight loss will be

Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per ton of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

-Using the above figure, in the absence of any government intervention, the number of tons of paper produced will be

Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table: Which of the following is TRUE?

The tragedy of the commons is the absence of incentives to

If the production of a good creates an external cost, is the supply curve the same as the marginal social cost or the same as the marginal private cost curve or both?

-The demand for bus service is perfectly elastic at a price of $1.00 a ride. The table above shows the bus company's marginal cost and the marginal social cost of the bus service. The competitive quantity of bus rides per week is

Explain why a producer who is causing external costs does not have the incentive to reduce these costs.

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. If Everest is a common resource, currently there is an ________ of the mountain.

According to the Coase theorem, part of what is needed for private transactions to be efficient is that property rights

Burning coal to generate electricity can create pollution. If the market for generating electricity is competitive and is allowed to operate without any government intervention, is the equilibrium quantity of coal burned equal to, more than, or less than the efficient quantity?

In an unregulated, competitive market, less than the efficient quantity of education is produced and consumed because

If the government assigns private property rights to a common resource, then the

-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. Suppose Motorland's government imposes a tax of $1.50 per gallon of gasoline sold. With the tax, when the market is in equilibrium, the deadweight loss is