Exam 5: Externalities, environmental Policy, and Public Goods

Issuing tradable emission allowances to polluting firms will result in those firms polluting more than is socially desirable.

Policies that mandate the installation of specific pollution control devices are called

Figure 5-7 -Refer to Figure 5-7.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Which of the following is an example of a common resource?

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

Which of the following displays rivalry and excludability in consumption?

Which of the following is an example of a common resource?

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 5-4 shows the paper market.Use this Figure to answer the following question(s). -Refer to Figure 5-4.What is the economically efficient output level?

If the United States and other developed nations pay the cost of reducing public emissions,developing nations such as China could benefit from the reduction while not contributing to it.In this sense,one can think of reducing carbon emissions as being like a

A product is considered to be rival if

What does the phrase "internalizing an external cost" mean?

Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?

If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost

Which of the following is an example of a quasi-public good?

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 5-16 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 5-16.Suppose Amit and Bree know each other's preferences so that it is not possible for one to deceive the other.Which of the following statements best describes the circumstances under which the optimal quantity of street lights could be achieved?

"When it comes to public goods,individuals do not reveal their true preferences because it is not in their self interest to do so." Evaluate this statement.

Figure 5-1 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 5-1.If,because of an externality,the economically efficient output is Q2 and not the current equilibrium output of Q1,what does S2 represent?

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 gasoline tax raises the price paid by consumers by ________ per gallon.

The social benefit of a given level of a public good is the vertical sum of all private benefits for that level.

A positive externality causes