Exam 10: Externalities

Research into new technologies provides a

Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced?

Which of the following problems can not be alleviated by a gasoline tax?

Table 10-3 -Refer to Table 10-3. The market equilibrium quantity of output is

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: • a private cost of $3.10; • a social cost of $3.55; • a value to consumers of $3.70. -Refer to Scenario 10-1. Let QMARKET represent the equilibrium quantity of gasoline, and let QOPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?

When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to

If we know that the supply curve for good x fails to reflect the total cost to society of producing that good, then we know that

Figure 10-11 -Refer to Figure 10-11. On the

Taxes that are enacted to mitigate the effects of negative externalities are sometimes called

Table 10-4 -Refer to Table 10-4. The market equilibrium quantity of output is

Table 10-3 -Refer to Table 10-3. The table represents a market in which

Which of the following statements is not correct?

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics. Multiple Choice - Section 02: Public Policies toward Externalities -Refer to Figure 10-13. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

Which of the following is not an effective method of reducing negative externalities?

Private contracts between parties with mutual interests

When externalities are present, reaching an efficient outcome is especially difficult when the number of interested parties is large.

Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?

A market for pollution permits can efficiently allocate the right to pollute by using the forces of supply and demand.

The tax on cigarettes is an example of

Which of the following is an example of a positive externality?