Exam 10: Externalities.

All externalities

Figure 10-2. The graph depicts the market for plastic. -Refer to Figure 10-2.Suppose that the production of plastic creates a social cost which is depicted in the graph above.Without any government regulation,how much plastic will be produced?

Laws that are passed that either require or forbid certain behaviors are examples of command-and-control policies.

Flu shots provide a positive externality.Suppose that the market for vaccinations is perfectly competitive.Without government intervention in the vaccination market,which of the following statements is correct?

Use a graph to illustrate the quantity of pollution that would be emitted (a)after a corrective tax has been imposed and (b)after tradable pollution permits have been imposed.Could these two quantities ever be equivalent?

Private parties may choose not to solve an externality problem if the transaction costs are large enough.

Internalizing a positive externality will cause the demand curve to

Figure 10-6 -Refer to Figure 10-6.Which price represents the equilibrium price of the product in this market?

Table 10-3 -Refer to Table 10-3.Taking into account private and external costs,the maximum total surplus that can be achieved in this market is

Writing in the New York Times in August 2009,N.Gregory Mankiw asserted that the particular "cap and trade" legislation that was making its way to President Obama's desk at that time would result in

When technology spillover occurs,

Two firms,A and B,each currently dump 50 tons of chemicals into the local river.The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river.The government will sell 40 pollution permits for $75 each.It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river,and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river.Neither firm produces any less output,but they both conform to the law.It is likely that between the cost of permits and the cost of additional pollution abatement,

Figure 10-4 -Refer to Figure 10-4.This market is characterized by

One drawback to industrial policy is that

Two firms,A and B,each currently emit 100 tons of chemicals into the air.The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air.The government gives each firm 40 pollution permits,which it can either use or sell to the other firm.It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air,and it costs Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air.After the two firms buy or sell pollution permits from each other,we would expect that Firm A will emit

In markets,the invisible hand allocates resources efficiently

Corrective taxes are unlike most other taxes because they

Figure 10-4 -Refer to Figure 10-4.The socially optimal quantity would be

In Singapore,littering fines are strictly enforced.This is an example of a policy that

Figure 10-9 -Refer to Figure 10-9.Which graph represents a market with no externality?