Exam 17: Externalities

Why should people without children pay some tax to support local schools?

Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the

When external benefits exist, which of the following can produce the efficient amount of output? I. vouchers II) private subsidies III) taxes IV) marketable permits.

-Suppose Motorland's government imposes a tax of $1.50 per gallon of gasoline sold. With the tax, when the market is in equilibrium, the deadweight loss is

A key contribution of Ronald Coase is that he pointed out that private transactions are efficient when the number of parties involved is small

Explain how a Pigovian tax works.

-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 benefit is

-When the market for gasoline in Motorland is in equilibrium, the deadweight loss is

If a good has an external cost, the

If the marginal private cost of producing one kilowatt of power in California equals five cents and the marginal social cost of each kilowatt equals nine cents, then the marginal external cost equals ________ per kilowatt.

-The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. The efficient quantity of chemicals to produce is ________ tons of chemicals a week.

One way of overcoming the problem of the commons is to make it private property.

-The table above shows the marginal costs and marginal benefits of college education. The marginal private benefit of college education at the efficient amount of enrollment is

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the tuition that will make the number of students equal to the efficient number?

-The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

If this pollution occurs, one way of reaching efficient production levels is by setting a Pigovian Tax. To achieve efficiency with this tax means that the tax must equal the

The difference between the marginal social cost and the marginal private cost equals the

An externality occurs when

-In the above table, the efficient level of output can be achieved through a per unit subsidy of