Exam 4: Market Failures: Public Goods and Externalities

Where there are spillover (or external) benefits from having a particular product in a society, the government can make the quantity of the product approach the socially optimal level by doing the following, except

Cost-benefit analysis attempts to

Assume that a government is considering a new social program and may choose to include in this program one of four progressively larger projects. The marginal cost and the marginal benefits of each of the four projects are given in the table below. Refer to the provided table and information. What is the net benefit of project D?

Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle

Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Amanda experiences

Answer the question on the basis of the following information for a public good. P_a and P_b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. If the marginal cost of producing this good at the optimal quantity is $4, the optimal quantity must be

An effective antipollution policy from the economic perspective requires that all pollution be eliminated and banned.

Credit bureaus provide credit histories to banks and insurance companies, in order to help deal with the problem of

Sellers will opt out of markets in which

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. In the situation described above, we would expect an

When producers do not produce the efficient amount of a product because they are unable to charge consumers what they need to get in order to produce the efficient amount, then we have a

Asymmetric information in a market transaction occurs when there is unequal knowledge possessed by the

What are the two characteristics that differentiate private goods from public goods?

If pollution coming from factories is bad, then why would the socially optimal level of pollution not be zero?

Jennifer buys a piece of costume jewelry for $33, for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences

Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is

Allocative efficiency occurs where (for the last unit) maximum willingness to pay exceeds minimum acceptable price by the greatest amount.

At the optimal quantity of a public good,

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be

The trains of the Transcontinental Railway Company, when shipping goods, sometimes emit sparks that start fires along the tracks and damage the property of others. If Transcontinental does not pay for the damage it causes, what has occurred?