Exam 15: Externalities, Environmental Policy and Public Goods

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set

What does a market demand curve reflect?

The efficient output level of a public good occurs where the

Figure 15.6 Figure 15.6 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 15.6.What is the market equilibrium output level?

How does a positive externality in consumption reduce economic efficiency?

'A competitive market achieves economic efficiency by maximising the sum of consumer surplus and producer surplus.' This statement

Private producers have no incentive to provide public goods because

Which of the following is an example of a non-excludable product?

Economist A.C.Pigou argued that to deal with a negative externality in production, the government should impose a tax equal to the cost of the externality.What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?

When there is a negative externality, the competitive output is more than the economically efficient output level.

The 'tragedy of the commons' refers to the phenomenon where

Which of the following displays these two characteristics: non-rivalry and excludability?

Figure 15.3 -Refer to Figure 15.3.In the absence of any government intervention, the private market

Which of the following is true of private costs?

Governments can increase the consumption of a product that creates positive externalities by

Figure 15.10 Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease.Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 15.10. -Refer to Figure 15.10.One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidise these vaccinations.What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalise the external benefits?

Figure 15.9 Companies producing toilet paper bleach the paper to make it white.The bleach is discharged into rivers and lakes and causes substantial environmental damage.Figure 15.9 illustrates the situation in the toilet paper market. -Refer to Figure 15.9.Suppose the government imposes a tax of $60 per ton of toilet paper to bring about the efficient level of production.What happens to the market price of toilet paper?

The basic cause of deadweight losses from the existence of common resources and externalities is

Because producers do not bear the external cost of pollution,

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.