Question 1

Reducing output from the privately optimal level to the socially optimal level will

Accepted Answer

A) cause a loss of consumption to consumers. 
B) reduce marginal damages. 
C) reduce the production costs. 
D) cause all of the above. 
A) cause a loss of consumption to consumers. 
B) reduce marginal damages. 
C) reduce the production costs. 
D) cause all of the above.

Question 2

Incentive-based regulations provide polluters no incentive to reduce pollution and are thus not used often.

Accepted Answer

A) True 
 B)False

Question 3

A tax levied on each unit of pollution is

Accepted Answer

A) a income tax. 
B) a emissions fee. 
C) a flat tax. 
D) an international tax. 
A) a income tax. 
B) a emissions fee. 
C) a flat tax. 
D) an international tax.

Question 4

Consider the case of two farmers,Tony and Hakim,depicted in the following figure.Both use DDT (a chemical pesticide)for their crops.The use of DDT causes an externality for swimmers down river from the farms.
(a)Show the amount of pesticides used if each uses the privately optimal level of pesticides.
(b)Show the amount of pesticides used if they are socially concerned.
(c)Why is a reduction back to XH = HT not socially desired?

Accepted Answer

(a)@#IMG-DLM& 
(b)@#IMG-DLM&(c

Question 5

Figure 5.11
 
Figure 5.12
-Refer to Figure 5.11 and Figure 5.12 of to answer this question:
A) In case of an inelastic marginal social benefit curve,what type of pollution reduction system should the government employ? Why?
B)If the social benefit curve is elastic,do you answer change?
C)What are advantages and disadvantages of Cap-and-Trade systems over Emission Fee systems when the inflation and change in marginal costs are considered?

Accepted Answer

A) When the social marginal benefit curv

Question 6

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

Accepted Answer

A) True 
 B)False

Question 7

A Pigouvian tax corrects for

Accepted Answer

A) market congestion. 
B) market losses. 
C) inefficient sales. 
D) low market prices. 
A) market congestion. 
B) market losses. 
C) inefficient sales. 
D) low market prices.

Question 8

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

Accepted Answer

Although answers may vary,the reader sho

Question 9

Congestion pricing

Accepted Answer

A) is a tax. 
B) keeps nasal passages clear. 
C) is never efficient. 
D) all of the above. 
A) is a tax. 
B) keeps nasal passages clear. 
C) is never efficient. 
D) all of the above.

Question 10

Why are command- and -control regulations less flexible than incentive based systems?

Accepted Answer

Although answers will vary,the main reas

Question 11

Market?oriented solutions to externalities rarely work.

Accepted Answer

A) True 
 B)False

Question 12

Externalities can be produced by ____________,as well as ____________.

Accepted Answer

A) individuals;firms 
B) market prices;market incomes 
C) oceans;streams 
D) none of the above 
A) individuals;firms 
B) market prices;market incomes 
C) oceans;streams 
D) none of the above

Question 13

A cap-and-trade policy

Accepted Answer

A) has a set number of permits. 
B) allows polluters to trade permits. 
C) caps the total level of pollution allowed. 
D) all of the above. 
A) has a set number of permits. 
B) allows polluters to trade permits. 
C) caps the total level of pollution allowed. 
D) all of the above.

Question 14

Externalities can be positive because

Accepted Answer

A) marginal damages do not last over time. 
B) utility can be impacted positively as well as negatively. 
C) there is no concept for marginal benefit. 
D) positive externalities are subsidies. 
A) marginal damages do not last over time. 
B) utility can be impacted positively as well as negatively. 
C) there is no concept for marginal benefit. 
D) positive externalities are subsidies.

Question 15

List and discuss three problems that might arise when using the Coase theorem.

Accepted Answer

Bargaining costs are generally

Question 16

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

Accepted Answer

A) True 
 B)False

Question 17

For market efficiency,MSC must be equated to MSB.

Accepted Answer

A) True 
 B)False

Reducing output from the privately optimal level to the socially optimal level will

Incentive-based regulations provide polluters no incentive to reduce pollution and are thus not used often.

A tax levied on each unit of pollution is

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

A Pigouvian tax corrects for

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

Congestion pricing

Why are command- and -control regulations less flexible than incentive based systems?

Market?oriented solutions to externalities rarely work.

Externalities can be produced by ,as well as .

A cap-and-trade policy

Externalities can be positive because

List and discuss three problems that might arise when using the Coase theorem.

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

For market efficiency,MSC must be equated to MSB.

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters

Exam 5: Externalities

Reducing output from the privately optimal level to the socially optimal level will

Incentive-based regulations provide polluters no incentive to reduce pollution and are thus not used often.

A tax levied on each unit of pollution is

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

A Pigouvian tax corrects for

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

Congestion pricing

Why are command- and -control regulations less flexible than incentive based systems?

Market?oriented solutions to externalities rarely work.

Externalities can be produced by ____________,as well as ____________.

A cap-and-trade policy

Externalities can be positive because

List and discuss three problems that might arise when using the Coase theorem.

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

For market efficiency,MSC must be equated to MSB.

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters

Externalities can be produced by ,as well as .