Exam 17: Externalities

A chemical factory and a fishing club share a lake. Producing chemicals creates water pollution that harms the fish. The marginal social cost, private marginal cost, and marginal benefit from producing chemicals are in the figure above. Initially the lake is owned by no one. Keeping in mind the Coase theorem, if transactions costs are low then if the chemical factory owns the lake ________ tons of chemicals will be produced and if the fishing club owns the lake, ________ tons of chemicals will be produced.

The marginal social cost is

-The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. What is the efficient amount of paper?

-A chemical factory and a fishing club share a lake. Producing chemicals creates water pollution that harms the fish. The marginal social cost, private marginal cost, and marginal social benefit from producing chemicals are in the figure above. If polluting is legal and no one owns the lake into which waste is dumped, then the amount of chemicals produced each week will be

What do we mean by "property rights" and why are they important?

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. The competitive equilibrium is at

If this pollution occurs, the market equilibrium with no government intervention extracts ________ natural gas than the efficient quantity and ________ a deadweight loss.

The Loma Linda City Council made it official in June 2008, passing the most restrictive smoking ordinance yet in the Inland area. Dr. Linda Ferry, who counsels veterans on quitting smoking at Jerry L. Pettis Memorial VA Medical Center, said that the smoking ordinance would protect children from exposure to secondhand smoke and discourage teenagers and adults from taking up smoking. What is TRUE about this situation?

-In the above figure, the unregulated, competitive market equilibrium is tuition of ________ and the equilibrium quantity is ________ students in college.

What is marginal external cost of production?

Most economist would consider the marginal private benefit of education is

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal private cost is

-A chemical factory and a fishing club share a lake. The marginal social costs, private marginal costs, and marginal benefits from producing chemicals are in the figure above. The chemicals dumped into the lake have always harmed the fish, but now they begin to damage the fishing boats as well. As a result, the

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 a subsidy to colleges of $6,000 per student per year, what is the tuition?

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the equilibrium number of students at the college if the market is unregulated?

-Based on the data in the above table, the table shows a market for a good with

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. According to the Coase Theorem, if the transactions costs are low and there are only a few people involved, the output will equal ________ tons of paper if ________ own the lake.

Taxes can yield the efficient level of pollution if the tax is set equal to the

-In the above table, the efficient level of output is

If the marginal social benefit of a good equals the marginal private benefit of the good, then the marginal external benefit of the good