Exam 17: Property Rights, Externalities, Rivalry, and Exclusion

Changing the price of a good will usually result in a negative externality.

When majority rule voting is used to determine whether to purchase a public good,

Which of the following statements about private and social costs is TRUE?

Over-fishing of common fishing grounds happens because fishing grounds are a common property and social and private incentive are the same.

Explain why state governments may charge a fee for beach access to address the commons problem.

Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's theorem,the optimal level of trash in the park can be achieved if

-The above figure shows the market for steel ingots.If the market is competitive,then to achieve the socially optimal level of pollution,the government can

If children go to school and become productive members of society,

Which of the following statements about private and social costs is TRUE in the presence of negative externalities created by pollution?

Markets tend to produce too little of an excludable public good because

When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

A firm operates and produces pollution that only harms an individual,Bob.The firm and Bob both know the costs and benefits of reducing pollution.Neither the firm nor Bob acts strategically while bargaining,and there are no transaction costs associated with bargaining.Explain how the efficient level of pollution occurs no matter whether the firm or Bob owns the property right to pollution.

-The above figure shows the market for steel ingots.If the market is competitive,and the government institutes a $100 specific tax on steel,then

-The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output,and the marginal cost to the firm's neighbor.The marginal cost of production is zero for the firm.If there is just one neighbor who owns the river,how much pollution is likely to occur?

Which of the following is NOT a common property?

-The above figure shows the marginal benefit from pollution for two firms.If both firms receive a marketable permit to pollute 25 units of pollution each,how much will each firm pollute and how much will a permit for one unit of pollution be worth?

In the presence of pollution,social welfare is maximized by

Suppose 100 citizens each derive marginal benefit from submarines according to the function MB = 10 - Q.If subs cost $100 each to produce,what is the efficient quantity of submarines?

To alleviate the commons problem,the government can

Two neighboring farmers must each decide whether to contribute to a fence that separates their properties.The fence costs a total of $20.Both farmers currently have a profit of $30 each.With a fence to keep each farmer's animals from wandering onto the other's property,both farmers would experience a $15 rise in profits.Draw the payoff matrix and discuss the possible outcomes.