Exam 10: Externalities

If the government taxes an industry that creates pollution, the tax I∙decreases the pollution. Ii∙increases the price of the product produced by the firms. Iii∙decreases the quantity of the good produced.

If all education in the United States were provided by private, tuition-charging schools,

A payment made by the government to private producers of roads and libraries would be an example of

-The figure shows the market for college education.In order for the efficient amount of education to occur, the government could provide a voucher of ________ per student.

A tax on a polluting industry

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?

Which of the following equations is correct?

A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

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

-The figure above shows the market for annual influenza immunizations the United States.Area B is the

If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

A problem with pollution charges or taxes as a solution to pollution is that

A marketable permit

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost.If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency?

When a forest is logged, it is possible for the logging to create "soil runoff," a situation in which the soil, no longer protected by trees, erodes and silts a river miles downstream from the logging area.Is soil runoff created by logging in Montana that ruins a river an example of a private cost to the lumbering company or an external cost?

Does inoculation against chicken pox have both private and external benefits?

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

Burning coal to generate electricity can create pollution.If the market for generating electricity is competitive and is allowed to operate without any government intervention, is the equilibrium quantity of coal burned equal to, more than, or less than the efficient quantity?

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?

"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.