Exam 5: Externalities, Environmental Policy, and Public Goods

Some policymakers have argue that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. If the government decided to impose a tax on soda, the government will cause

Figure 5-3 -Refer to Figure 5-3. At the competitive market equilibrium, for the last unit produced,

Negative externalities and the tragedy of the commons are problems that have a common source. What is this common source?

Goods differ on the basis of whether their consumption is rival and excludable. Explain the terms "rivalry" and "excludability" as they are used to define goods. List the four categories of goods, and define these categories in terms of rivalry and excludability.

A positive externality results when

Medical research that ends in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?

Economic incentives are designed to make individual self-interest coincide with social interest. According to economists, which of the following methods of pollution control best uses economic incentives to reduce pollution?

Figure 5-9 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market. -Refer to Figure 5-9. The private profit-maximizing output level is

Determine if each of the products below displays any of the following characteristics: (i) rivalry (ii) nonrivalry (iii) excludability (iv) nonexcludability. a. a freeway during peak commute hours b. an online college course c. infectious disease prevention d. open source software such as Linux e. a movie showing at Century Theatres

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

Figure 5-13 Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13. The market equilibrium quantity of gasoline is ________ million gallons per month.

In economics, the optimal level of pollution is the level for which the net benefit from reducing the pollution is the greatest.

Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because

Assume that production from an electric utility caused acid rain. If the government imposed a tax on the utility equal to the cost of the acid rain, the government's action would

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

When there is a negative externality, the private cost of production ________ the social cost of production.

Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service. The value of the service to each of them is $50 and it costs $80 to hire a housecleaner. Suppose Bella is lazy and a spendthrift and Sefronia suspects that Bella will be willing to pay $80. What is Sefronia likely to do, given that she is as rational as any other person?

For the Coase theorem to work, there must be clear assignment of property rights.

Ronald Coase was awarded the 1991 Nobel Prize in Economics primarily for addressing problems related to externalities. Which of the following describes Coase's work?

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.