Exam 10: Externalities

Some environmentalists argue that we should protect the environment as much as possible,regardless of cost.Which of the following is not a likely outcome of pursuing such a course of action?

University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs.Suppose that the federal government gives grants to these researchers equal to the their per-unit production externality.What is the relationship between the equilibrium quantity of university research and the socially optimal quantity of university research produced?

Assume that your roommate is very messy.Suppose she gets a $50 benefit from being messy but imposes a $100 cost on you.The Coase theorem would suggest that an efficient solution would be for you to

Flu shots provide a positive externality.Suppose that the market for vaccinations is perfectly competitive.Without government intervention in the vaccination market,which of the following statements is correct?

The Golden Rule is an example of a private solution for

Which of the following is a difference between corrective taxes and tradable pollution permits?

Which of the following statements is correct?

When the production of a good results in a positive externality,the social value curve is:

Mary and Cathy are roommates.Mary assigns a $30 value to smoking cigarettes.Cathy values smoke-free air at $15.Which of the following scenarios is a successful example of the Coase theorem?

The difference between a corrective tax and a tradable pollution permit is that

According to the Coase theorem,private markets will solve externality problems and allocate resources efficiently as long as

Regulations to reduce pollution

What economic argument suggests that if transactions costs are sufficiently low,the equilibrium is economically efficient regardless of how property rights are distributed?

Even if possible,it would be inefficient to prohibit all polluting activity.

Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality?

The difference between social cost and private cost is a measure of the

Betty's cat causes Suzy to sneeze.Betty values her cat's companionship at $300 per year.The cost to Suzy of tissues and her allergy medication is $350 per year.Based on the Coase theorem,

In the case of a technology spillover,the government can encourage firms to internalize a positive externality by

Which of the following is not a necessary condition for the Coase theorem?

Using a supply and demand diagram,demonstrate how a positive externality leads to market inefficiency.How might the government help to eliminate this inefficiency?