Exam 10: Externalities

Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality

Dog owners do not bear the full cost of the noise their barking dogs create and,therefore,tend to take too few precautions to prevent their dogs from barking.How do local governments address this problem

Figure 10-6 -Refer to Figure 10-6.Which curve best represents a corrective tax

Both pollution permits and corrective taxes are viewed as cost-effective ways to keep the environment clean.

When the social cost curve is above a product's supply curve,what do we know

When do negative externalities occur

Two firms,A and B,each currently dump 50 tonnes of chemicals into the local river.From now on both firms will require a pollution permit for each tonne of pollution dumped into the river.The government will sell 40 pollution permits for $75 each.It costs Firm A $100 for each tonne of pollution that it eliminates before it reaches the river,and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the river.Between the cost of permits and the cost of additional pollution abatement,what is likely to happen

What will internalizing a negative externality cause the supply curve of an industry to do

What will a positive externality cause a market to produce

Using a demand and supply framework,explain why governments subsidize university education.