Exam 10: Externalities

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,if a pollution tax is imposed that is equal to the marginal external cost of pollution,then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

A marketable permit

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. -Based on the figure above,if the factory owned the river then at the equilibrium,marginal social cost would ________ marginal benefit,and the quantity of chemical produced would be ________.

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

If the government provides a subsidy to producers,what is the effect of this policy in a supply and demand diagram?

-The figure above shows the costs and benefits associated with producing paper.What is the unregulated competitive market level of output?

"Education in elementary and high schools has external benefits because families who have a lot of children do not pay any more than families without children." Is this statement correct or incorrect? Explain your answer.

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.At what level should tuition be set to ensure the efficient number of students?

Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?

Which of the following equations is correct?

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve.The marginal cost paid by the producers and everyone else in society when 100 billion kilowatt hours are produced is

-The figure above shows the market for college education in the United States.If the government has a goal of enrolling the efficient number of students each year,the government should provide a voucher to students equaling ________.

Transactions costs are the

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,if a pollution tax is imposed that is equal to the marginal external cost of pollution,then when the market is in equilibrium,the deadweight loss is ________ thousand per month.

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). -the figure above shows that the unregulated market equilibrium occurs at a tuition of ________ a year and ________ million students.

What are marketable permits? Suppose there are two firms in an area,each emitting tons of sulfur.The government decides on a target level of 200 tons of sulfur,and gives each firm a permit to emit 100 tons of sulfur.Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500.Firm B has an older plant,so it will cost Firm B $1,000 to reduce emissions by 100 tons.What will occur with marketable permits?

An externality can be a cost or benefit arising from the production of a good that falls upon

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

-The figure above shows an education market in which the government is providing households with vouchers.What is the efficient quantity of students?