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

-The figure above shows the marginal social cost of generating electricity and the marginal private cost. For 4 billion kilowatts, what is the marginal external cost?

Suppose Julie plants a beautiful garden in her front yard. The benefits of the garden to Julie and to her neighbors equals the

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

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.

A marketable permit

When the government uses a private subsidy in a market with an external benefit, to reach the efficient quantity of production, the subsidy must be equal to the marginal

In the figure, the unregulated market equilibrium occurs at a price of ________ a ton and quantity of ________ tons.

Externalities

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called

When studying pollution and the environment, economists

The production of a good or service by an authority that receives the most of its revenue from the government is referred to as

Which of the following is NOT an example of a good with an external cost?

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.

In the figure above, when the market is unregulated and in equilibrium, the deadweight loss is ________ thousand per month.

The Coase theorem deals with the problem of pollution by

Marginal social cost (dollars per course) Quantity of students Marginal private benefit Marginal social benefit 100 4,500 20 60 80 4,000 40 80 60 3,500 60 100 40 3,000 80 120 20 2,500 100 140 -The table above gives the marginal social cost (which equals the price), marginal private benefit, and marginal social benefit of students attending Diablo Valley College (DVC)in Concord, California. a. When 4,500 students attend DVC, what does the marginal external benefit equal? b. If the market is competitive and left without government intervention, what is the quantity of students that will attend DVC and what will be the price of a course? c. What is the efficient quantity of students attending DVC? d. If the government can set the price per course, in order to have the efficient quantity of students attending DVC, what should the government set as the price?

-The figure above shows the market for college education in the United States. If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is ________.

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If this market is left unregulated and no pollution tax is imposed, the equilibrium quantity of gasoline is

Suppose unregulated production of pesticides results in an equilibrium price and quantity of $400 and 1,000 tons per day, respectively, and a marginal external cost of $10 a ton. a. If the government were to eliminate the external cost by using pollution charges, what should the pollution charge be set at? b. If the government were to eliminate the external cost by using taxes, what should the tax equal? c. Would the government actions described above affect the quantity of pesticides produced? If yes, how? If no, why not?

-The figure above shows the market for college education. Left to itself without any government intervention, a competitive market would create a deadweight loss equal to