Question 1

The Commons Problem arises because

Accepted Answer

A)  firms don't maximize profits. 
B)  social and private incentives are not aligned and property rights are missing. 
C)  social cost equals private cost and property rights are missing. 
D)  social benefit equals private benefit and property rights are missing. 
A)  firms don't maximize profits. 
B)  social and private incentives are not aligned and property rights are missing. 
C)  social cost equals private cost and property rights are missing. 
D)  social benefit equals private benefit and property rights are missing.

Question 2

-The above figure shows the marginal benefit from pollution for two firms.If both firms receive a marketable permit to pollute 25 units of pollution each,how much will each firm pollute and how much will a permit for one unit of pollution be worth?

Accepted Answer

Firm B will sell permits to firm A until

Question 3

To alleviate the commons problem,the government can

Accepted Answer

A)  apply a tax. 
B)  set a quota. 
C)  assign property rights. 
D)  All of the above. 
A)  apply a tax. 
B)  set a quota. 
C)  assign property rights. 
D)  All of the above.

Question 4

-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.If nobody owns the lake,then

Accepted Answer

A)  joint profits are zero. 
B)  joint profits are maximized. 
C)  joint profits are not maximized. 
D)  the beach will not operate because of too much pollution. 
A)  joint profits are zero. 
B)  joint profits are maximized. 
C)  joint profits are not maximized. 
D)  the beach will not operate because of too much pollution.

Question 5

A monopoly might produce less than the socially optimal amount of pollution because

Accepted Answer

A)  it likes to be a good citizen. 
B)  it sets price above marginal cost. 
C)  it earns economic profit. 
D)  it internalizes the external costs. 
A)  it likes to be a good citizen. 
B)  it sets price above marginal cost. 
C)  it earns economic profit. 
D)  it internalizes the external costs.

The Commons Problem arises because

-The above figure shows the marginal benefit from pollution for two firms.If both firms receive a marketable permit to pollute 25 units of pollution each,how much will each firm pollute and how much will a permit for one unit of pollution be worth?

To alleviate the commons problem,the government can

A monopoly might produce less than the socially optimal amount of pollution because

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Asymmetric Information

Contracts and Moral Hazards

Filters

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

The Commons Problem arises because

-The above figure shows the marginal benefit from pollution for two firms.If both firms receive a marketable permit to pollute 25 units of pollution each,how much will each firm pollute and how much will a permit for one unit of pollution be worth?

To alleviate the commons problem,the government can

A monopoly might produce less than the socially optimal amount of pollution because

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Asymmetric Information

Contracts and Moral Hazards

Filters