Exam 5: Externalities, environmental Policy, and Public Goods

Which of the following statements describes the Coase Theorem?

Figure 5-4 Consider a chemical plant that discharges toxic fumes over a nearby community.To reduce the emissions of toxic fumes the firm can install pollution abatement devices.Figure 5-4 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions. -Refer to Figure 5-4.Suppose the emissions reduction target is currently established at 8 million tons.What is the area that represents the cost of eliminating an additional 1 million tons?

When there is a positive externality

The first economist to systematically analyze market failure was

An external cost is created when you

Kenneth Chay and Michael Greenstone examined the impact of reductions in air pollution since the passage of the Clean Air Act of 1970.Which of the following statements summarizes their findings?

Which of the following is an example of a common resource?

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain.This is an example of

Figure 5-1 Suppose there are several paper mills producing paper for a market.These mills,located upstream from a fishing village,discharge a large amount of wastewater into the river.The waste material affects the number of fish in the river,and the use of the river for recreation and as a public water supply source.Figure 5-1 shows the paper market.Use this Figure to answer the following question(s). -Refer to Figure 5-1.Why is there a deadweight loss?

Assume that air pollution from a copper smelter imposes external costs on people who live near the smelter.If the victims of the pollution could not legally enforce the right of their property not to be damaged,the amount of pollution reduction

Which of the following is an example of the U.S.government's use of a "command and control" approach to reducing pollution?

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

Which of the following describes how a negative externality affects a competitive market?

What is meant by the term "internalizing an externality"? How does a Pigovian tax or subsidy internalize an externality?

If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost,

A private good is

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

All of the following are examples of public goods except

Figure 5-8 Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 5-8 shows their willingness to pay for different quantities of street lights,the market demand for street lights and the marginal cost of installing the street lights. -Refer to Figure 5-8.How much is Bree willing to pay to have 4 street lights installed?

It is difficult for a private market to provide the economically efficient quantity of a public good because