Exam 17: Property Rights, externalities, rivalry, and Exclusion

In the presence of a negative externality generated by producing a good,a competitive market will produce more of that good than is socially optimal.

If a production process creates pollution,a competitive market produces excessive pollution because

The exclusive privilege to use an asset is called a(n)

-The above figure shows the payoff matrix for two firms.A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake.A private beach on the lake must decide whether to operate or not.Increased pollution reduces the number of people who wish to visit the beach.As long as someone owns the lake and the two parties can negotiate,then

The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called

In the presence of an negative externality,a specific tax can achieve the social optimum because

In terms of cost-benefit analysis,explain why a competitive market with an externality produces too much pollution.

If children go to school and become productive members of society,

-The above figure shows the market for steel ingots.If the market is competitive,and the government institutes a $100 specific tax on steel,then

Explain the externality generated when a shepherd grazes sheep in a field that is common property that several other shepherds use.

-The above figure shows the market for steel ingots.The optimal quantity of pollution

A public good in which exclusion is possible is called

If both a monopoly and a competitive market with the same marginal cost would produce a quantity that is greater than the social optimum in a market because of externalities,then

For the following, please answer "True" or "False" and explain why. -Because a monopoly will produce less of a good than a competitive market will,welfare is always greater under monopoly than under competition in the presence of a negative externality.

For the following, please answer "True" or "False" and explain why. -When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

-Suppose that the market for steel is shown in the above figure.What specific tax would result in a competitive market producing the socially optimal quantity of steel?

Which of the following is NOT a club good?

-The above figure shows the market for steel ingots.What is the total surplus under social optimum?

The price of pie increases.Some people who purchased pie before the price increase no longer purchase pie.This is

-The above figure shows the market for steel ingots.If the market is competitive,then to achieve the socially optimal level of pollution,the government can