Exam 10: Externalities

If the social value of producing robots is greater than the private value of producing robots,the private market produces too few robots.

If education produces positive externalities and the government does not intervene in the market,we would expect

Figure 10-10 -Refer to Figure 10-10.Which of the following is not necessary in order for the corrective tax and pollution permit to have equivalent effects?

Private contracts between parties with mutual interests

Technology spillover occurs when

The supply curve for a product reflects the

When a negative externality exists in a market,the cost to producers

Suppose that flu shots create a positive externality equal to $12 per shot.Further suppose that the government offers a $5 per-shot subsidy to producers.What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced?

Figure 10-4 -Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be

In the case of a technology spillover,internalizing a positive externality through a government subsidy will cause the industry's supply curve to

In a market economy,government intervention

Suppose that electricity producers create a negative externality equal to $5 per unit.Further suppose that the government impose a $5 per-unit tax on the producers.What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of electricity to be produced?

Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized by the student in the form of higher wages.If there are no government subsidies for MBAs,then which of the following statements is correct?

Figure 10-3 -Refer to Figure 10-3.The difference between the social cost curve and the supply curve reflects the

Figure 10-9 -Refer to Figure 10-9,Panel (b)and Panel (c).Which of the following is correct?

A dentist shares an office building with a radio station.The electrical current from the dentist's drill causes static in the radio broadcast,causing the radio station to lose $10,000 in profits.The radio station could put up a shield at a cost of $30,000;the dentist could buy a new drill that causes less interference for $6,000.Either would restore the radio station's lost profits.What is the economically efficient outcome?

An externality is the impact of

A negative externality

Suppose that cigarette smokers create a negative externality.Further suppose that the government imposes a tax on cigarettes equal to the per-unit externality.What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of cigarettes?

John lives in an apartment building and gets a $500 benefit from playing his stereo.Mary,who lives next door to John and often loses sleep due to the loud music coming from John's stereo,bears a $700 cost from the noise.Mary would like to offer John some money to turn down the volume on his stereo.If Mary had to hire a lawyer to draw up the contract,what is the maximum amount she could pay to the lawyer to ensure that both John and Mary would benefit from the agreement?