Exam 10: Externalities

If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output,which of the following occurs? i.the supply curve shifts leftward ii.the price increases iii.the quantity produced decreases

The use of vouchers for education

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC). -Using the figure above,suppose education is provided by public colleges,where tuition is set at $10,000 a year.Then,________ million students are enrolled,and the taxpayers cover ________ of marginal cost per student.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal private benefit.There is no external benefit.The efficient number of concerts in Seattle is

For a firm,its labor costs are

Legally established titles to ownership,use,and disposal of factors of production and goods and services,are called ________ rights.

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?

Which of the following best describes an externality?

When production of a good results in an external cost,the unregulated competitive market equilibrium is inefficient because ________.

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.

-The figure above shows the market for annual influenza immunizations the United States.If the government does not intervene in this market,deadweight loss equals ________.

A government subsidy

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the market is competitive and unregulated,the equilibrium quantity is ________ billions of kilowatt hours per day and the efficient quantity is ________ billions of kilowatt hours per day

A example of a good with external benefits is

A chemical factory dumps waste into a river. The figure above shows the demand curve for the chemical (D) and the marginal private cost (MC) and marginal social cost (MSC) of producing it. -In the figure above,when the market is unregulated and in equilibrium,the deadweight loss is ________ thousand per month.

The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

A competitive,unregulated market would

Which of the following is an example of an external cost?

-The above figure shows the market for fertilizer.When fertilizer is applied to lawns,it runs off into neighboring streams and ponds,killing fish and creating an external cost. a.What is the equilibrium price and quantity of fertilizer in an unregulated,competitive market? b.What is the efficient quantity of fertilizer? c.Suppose government imposes a tax equal to the marginal external cost.What is the equilibrium price paid by consumers and the equilibrium quantity after implementation of the tax? d.At the output level in part (c),how much is the tax? e.How much tax revenue does government collect? f.What is the deadweight loss borne by society if the externality is left uncorrected?

The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost because