Exam 10: Externalities.

John lives in an apartment building and gets a $700 benefit from playing his stereo.Mary,who lives next door to John and often loses sleep due to the music coming from John's stereo,bears a $1,000 cost from the noise.At which of the following offers from Mary could both Mary and John benefit from the silencing of John's stereo?

Suppose that electricity producers create a negative externality equal to $5 per unit.Further suppose that the government gives a $5 per-unit subsidy to producers.What is the relationship between the equilibrium quantity and the socially optimal quantity of electricity to be produced?

Tradable pollution permits

Private solutions may not be possible due to the costs of negotiating and enforcing these solutions.Such costs are called

Figure 10-18. The graph represents a corrective tax to reduce pollution. On the axes, Q denotes the quantity of pollution and P represents the price of pollution. -Refer to Figure 10-18.What is the appropriate label for the downward-sloping line on the graph?

Because there are positive externalities from higher education,

Which of the following would not be considered a negative externality?

Which of the following statements is correct?

A patent is used to

Corrective taxes enhance efficiency,but the cost to administer them exceeds the revenue they raise for the government.

A cost imposed on someone who is neither the consumer nor the producer is called a

Barking dogs cannot be considered an externality because externalities must be associated with some form of market exchange.

Figure 10-6 -Refer to Figure 10-6.Which quantity represents the socially-optimal quantity of output in this market?

Which of the following is true of markets characterized by positive externalities?

When the government uses a command-and-control policy to solve an externality,it

A gasoline tax is designed to correct each of the following problems except

Suppose that flu shots create a positive externality equal to $12 per shot.Further suppose that the government offers a $12 per-shot subsidy to producers.What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced?

Table 10-1 The following table shows the private value, private cost, and external cost for various quantities of output in a market. -Refer to Table 10-1.What is the equilibrium quantity of output in the market?

When the social cost curve is above a product's supply curve,

Private markets fail to account for externalities because