Exam 5: Externalities, environmental Policy, and Public Goods

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

A.C.Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality.

Figure 5-3 -Refer to Figure 5-3.The size of marginal external benefits can be determined by

Which of the following is an example of a Pigovian tax?

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.

How does a negative externality in production reduce economic efficiency?

If there is pollution in producing a product,then the market equilibrium price

When production generates a negative externality,the true cost of production is the

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

The tragedy of the commons was avoided in the Middle Ages by

Because producers do not bear the external cost of pollution

State whether each of the following goods and services is nonrival,nonexcludable or both: a.A toll road b.A public park c.A lighthouse d.An art museum e.A radio broadcast of "A Prairie Home Companion"

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

Article Summary According to a study by the Center for Neighborhood Technology, homes located within one-half mile of frequently-used public transportation held their value much better during the recent housing market downturn than did those without easy access to public transportation, and the greater home values reflect greater demand for neighborhoods in close proximity to public transportation. In addition to higher home values, the study found that close proximity to public transportation offers lower transportation costs, a wider variety of travel options, and access to more employment opportunities. Source: Meg Handley, "Study: Proximity to Public Transit Boosts Home Values," U.S. News & World Report, March 22, 2013. -Refer to the Article Summary.Higher home values which result from close proximity to public transportation are an example of a ________ due to the public transportation.

Figure 5-3 -Refer to Figure 5-3.In the absence of any government intervention,the private market

The Coase theorem states that

What is a "social cost" of production?

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.Suppose the government wants to use a Pigovian tax to bring about the efficient level of production.What should the value of the tax be?

Figure 5-7 -Refer to Figure 5-7.The marginal cost of reducing pollution curve is the same curve as

What is an externality?