Exam 17: Externalities

If a good has zero external costs, then

The Coase Theorem points out that for an efficient outcome to result, it is irrelevant which party receives the property rights.

If an external cost exists, then who bears the external cost in an unregulated competitive market transaction?

In 2008, a man was charged with one count of illegally stocking wild animals, a civil offense. State investigators had accused him of bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land in 2002, spawning a feral hog population that has caused thousands of dollars in crop damage to hundreds of farms in the region. Can the Coase theorem apply in this example? Why or why not?

If the government assigns private property rights to a common resource, then the

For a common resource, the marginal social cost of the resource is ________ the marginal private cost.

When the production of a good has an external cost, the

Marginal social cost is equal to the

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, the amount of enrollment is

-The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. If the waterway is owned by a water ski club and the Coase theorem applies, then the factory will produce ________ tons of chemicals a week.

Air pollution caused by lead

-Using the above figure, the efficient amount of paper produced is

-The table above gives the private costs and external costs of producing paper. a) Complete the table by finding the marginal social cost at each level of production. b) If the market is competitive and is left unregulated and 400 tons of paper are produced, what is the price of a ton of paper? c) If the government imposes a tax equal to the external cost at each level of production, what price would be charged if 400 tons are produced?

One way that government can encourage the production of goods or services that have external benefits is to subsidize the good or service.

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant. -In the figure above, if the government provides the efficient amount of education, how many students will be accepted?

For a common resource, the marginal private benefit of the resource is greater than the marginal social benefit.

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

-In the above figure, the competitive unregulated equilibrium is producing and consuming ________ tons of paper at a price of ________ per ton.

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?

The tragedy of commons is the