Exam 10: Externalities

Vaccinations are heavily subsidised in order to get the optimal number of people vaccinated.

Which of the following statements about a market that is affected by a positive production externality is correct?

Hikers frequently claim that livestock grazing in wilderness recreation areas reduce the satisfaction of their recreational hiking experience. An explanation would be that:

Consider a local factory that pollutes a nearby stream. Local fishers may be unable to negotiate a deal with the local factory to eliminate the negative externality because:

Evaluate the following statement: 'The problem of second hand smoke in places of employment is different to the problem in public restaurants. People typically don't have very many employment options but they do have many alternatives for selecting a place to eat. As such, direct regulation of second hand smoke in public restaurants is likely to be inefficient'.

Graph 10-5 -Refer to Graph 10-5. Which of the graphs shown best depicts the case of a positive production externality?

Internalising a positive production externality will cause the supply curve faced by an industry to:

The size and scope of technology spillovers is easy for governments to measure.

Suppose that a steel factory emits a certain amount of air pollution and that this pollution constitutes a negative externality. If this market is not required to internalise this externality:

When externalities exist, buyers and sellers:

Total pollution is increased when firms are allowed to trade in carbon credits.

In Singapore, property taxes on an automobile can exceed the purchase price of a new automobile. Assuming that the tax is a fixed percentage of market value, which of the following does this tax represent? (i) a policy in which private incentives are used to reduced the traffic externality on congested roads in Singapore (ii) the government's direct control over the number of automobiles that are purchased (iii) a policy in which private incentives are used to reduce automobile pollution

Internalising a positive production externality through technology policy:

At any given quantity, the height of the supply curve for elephant ivory shows the:

Internalising a positive production externality will cause the demand curve faced by an industry to:

Firms that can reduce pollution easily will be willing to sell their emissions permits.

Private parties can negotiate a solution to an externality in all cases.

If a particular market is associated with an externality, the social optimum should include the wellbeing of:

When dealing with consumption externalities, the market equilibrium can be moved closer to the social equilibrium by:

Consider the following negative production externality as depicted: Identify the social optimum and explain how Pigovian taxes could be used to achieve this outcome.