Exam 9: Externalities: Pollution, Education, and Health Care

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). -In the figure above, suppose a subsidy is provided to private colleges. What amount of subsidy will ensure the efficient number of students?

-The figure above shows the market for annual influenza immunizations the United States. If the government does not intervene in this market, the number of immunizations per year is ________ and the efficient number of immunizations per year is ________.

-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 price is ________ per kilowatt hour and the equilibrium quantity is ________ billion kilowatt hours per day.

-When young students are hungry, they can be disruptive and inattentive in class. Thus, providing lunch to students has external benefits. The figure above represents the market for school lunches before and after government vouchers are issued. a. What is the unregulated private market equilibrium? b. What is the efficient quantity of lunches? c. What is the amount of the voucher necessary to move the economy to the efficient number of lunches? d. When vouchers are used, what is the dollar price of the lunch that suppliers receive and what is the dollar price that consumers pay when the voucher is used?

If an external benefit is present in the consumption of a good or service, then

A government subsidy paid to a firm i. increases the demand for the good. Ii. has no effect on the supply of the good. Iii. leads to an increase in the equilibrium quantity.

Why does an external cost lead to inefficient overproduction?

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?

Which of the following best describes an externality?

A private cost is a cost of production that is

-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.

-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 200 billion kilowatt hours are produced is

When government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the

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

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?

If the production of a good causes pollution (an external cost)is the unregulated competitive market equilibrium of that product efficient?

Marginal social cost is equal to

A voucher is

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 ________.

-The figure shows the market for college education. The efficient number of students is