Exam 5: Externalities, environmental Policy, and Public Goods

Congress passed the Clean Air Act in 1970.Since this act was passed,emissions of the six main air pollutants

Steven Cheung examined the relationship between beekeepers and apple growers.Cheung noted that: "Pollination contracts usually include stipulations regarding the number and strength of ...[bee] colonies,the rental fee per hive,the time of delivery...the protection of bees from pesticides,and the strategic placing of hives." Cheung's suggests that the relationship between beekeepers and apple growers is an example of

All else equal,if the government decides to impose a tax on potato chips,the equilibrium quantity of potato chips would ________ and the equilibrium price of potato chips would ________.

Haiti was once a heavily forested country.Today,80 percent of Haiti's forests have been cut down,primarily to be burned to create charcoal.The reduction in the number of trees has lead to devastating floods when it rains heavily.This is an example of

In 2011,the Environmental Protection Agency proposed a plan to enact tougher limits on smog-forming ozone.By implementing new pollution regulations,the government will cause the polluters'

A modern example of the tragedy of the commons is the forests in many poor countries.

When the government imposes a tax equal to the external cost of producing a product that causes pollution,the government is said to externalize the externality.

If the government decides to impose a tax on potato chips,the government will cause

The U.S.government has frequently used a "command and control" approach in dealing with pollution.Which of the following describes this approach?

Figure 5-3 Figure 5-3 shows the market for measles vaccinations,a product whose use generates positive externalities. -Refer to Figure 5-3.What is the deadweight loss resulting from producing at the market equilibrium?

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.What is the economically efficient level of pollution reduction?

The free rider problem refers to a situation in which

Which of the following could be evidence of a market failure?

Figure 5-2 Figure 5-2 shows a market with an externality.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂. -Refer to Figure 5-2.If,because of an externality,the economically efficient output is Q₂ and not the current equilibrium output of Q₁,what does D₁ represent?

If there are no externalities a competitive market achieves economic efficiency.If there is a negative externality,economic efficiency will not be achieved because

Figure 5-3 Figure 5-3 shows the market for measles vaccinations,a product whose use generates positive externalities. -Refer to Figure 5-3.What does D₂ represent?

State the Coase theorem.What are some of the limitations of the Coase theorem in practice?

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.What does S₂ represent?

In order to determine what quantity of a public good should be supplied governments sometimes use

State and local governments subsidize college students with grants and low-interest loans.The loans and subsidies are examples of