Exam 10: Externalities

Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and several of his friends and relatives avoid the flu for the entire flu season. It would make sense to argue that

The Environmental Protection Agency (EPA) requires that firms in a certain industry adopt a particular technology to reduce the emission of pollutants. Is this requirement a command- and-control policy or is it a market-based policy?

The Coase theorem asserts that, in the presence of externalities,

Because there are positive externalities from higher education,

Which of the following statements is not correct?

Figure 10-9 -Refer to Figure 10-9, Panel (b) and Panel (c). The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the socially optimal quantity of smokestack scrubbers is represented by point

Table 10-1 The following table shows the private value, private cost, and external cost for various quantities of output in a market. -Refer to Table 10-1. Which of the following statements is correct?

In the case of a technology spillover, internalizing a positive externality will cause the supply curve of an industry to

Suppose the market-equilibrium quantity of good x is 5,000 units and the socially-optimal quantity of good x is 4,000 units. Then

Which of the following is not an advantage of corrective taxes?

Which of the following statements is correct about a market in which pollution is emitted?

Figure 10-10 -Refer to Figure 10-10. A decrease in output from 160 units to 120 units would

Which of the following is not a necessary condition for the Coase theorem?

Figure 10-2. The graph depicts the market for plastic. -Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, what price will the firm charge per unit of plastic?

With a corrective tax, the supply curve for pollution is

Social welfare can be enhanced by allowing firms to trade their rights to pollute.

Assume that your roommate is very messy. Suppose she gets a $25 benefit from being messy but imposes a $50 cost on you. The Coase theorem would suggest that an efficient solution would be for you to

According to the Coase theorem, in the presence of externalities

That some firms are engaged in more than one type of business is explained, in some cases, by

In class action lawsuits interested parties to the lawsuit are not required to pay attorney fees directly. This is an example of an attempt to