Exam 11: Monopolistic Competition and Oligopoly

Economist A.C.Pigou argued that to deal with a negative externality in production,the government should impose a tax equal to the cost of the externality.What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?

For which of the following firms is patent protection of vital importance?

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

A public good is a good that is both rival and excludable.

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

The demand curve for a public good is also called the

Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 4000 kilograms of pecans are sold,

Figure 11-4 Figure 11-4 shows a market with a negative externality. -Refer to Figure 11-4.The size of marginal external costs can be determined by

Figure 11-2 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 11-2 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 11-2.How much is Bree willing to pay to have 4 street lights installed?

Figure 11-6 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 11-6 shows the paper market. Use this Figure to answer the following question(s). -Refer to Figure 11-6.What does S₂ represent?

________ describes the actions a firm takes to maintain the differentiation of its product over time.

When a tax on output is imposed to internalise the external costs of pollution,the supply curve shifts down by the amount of the tax.

One difference between the demand for a private good and that for a public good is that

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

Figure 11-16 Figure 11-16 shows the market for Atlantic salmon, a common resource. The current market equilibrium output of Q₁ is not the economically efficient output. The economically efficient output is Q₂. -Refer to Figure 11-16.The current market equilibrium output is partly the result of overfishing.In that case,what does S₂ represent?

If electric utilities continually reduce their emissions of sulphur dioxide,

What is the private benefit from consumption? What is the social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

One result of the public choice model is that most economists believe that

Public goods are distinguished by two primary characteristics.What are they?