Exam 10: Externalities

-The figure above shows the market for steel,the production of which creates pollution. a.What point represents the equilibrium price and what point represents the equilibrium quantity in an unregulated,competitive market? b.What area represents the deadweight loss of the unregulated,competitive market outcome? c.What point represents the efficient quantity? d.If the output level in part (c)was achieved through the use of a government imposed tax,what price would consumers pay? What price would the producers receive? What distance represents the amount of the tax? e.If government successfully uses marketable permits to eliminate the external cost,what point represents how much output would be produced?

Which of the following is true?

A firm dumps dioxin in a river,thereby severely polluting the river.The cost of the water pollution is i.zero for the firm. ii.an external cost. iii.part of the marginal social cost

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC). -Based on the figure above,when the market is unregulated and is in equilibrium,the deadweight loss is

If the government taxes an industry that creates pollution,the tax i.decreases the pollution. ii.increases the price of the product produced by the firms. iii.decreases the quantity of the good produced.

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered.It also illustrates the marginal benefit.There is no external benefit.If the city of Seattle puts on 5 concerts per year,then the marginal benefit will

Which of the following is an example of a product that is made available through public provision? i.local police protection ii.public schools iii.local fire department

-The figure above shows the market for private elementary school education in Chicago.There is no external cost of private elementary education.If the government does not intervene in this market,the equilibrium number of students being privately educated is

A government subsidy

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC). -In the figure above,suppose a subsidy is provided to private colleges.What amount of subsidy will ensure the efficient number of students?

Which of the following is NOT an example of a good with an external cost?

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals ________ and marginal external benefit equals ________.

How has air quality changed in the United States since 1980?

When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution,the result is

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC). -The figure above shows that the unregulated market equilibrium occurs at a tuition of ________ a year and ________ million students.

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC). -The figure above shows that at the unregulated market equilibrium,marginal social benefit ________ marginal cost,and the number of students enrolled is ________.

"External benefits lead to overproduction so that more than the efficient quantity is produced." Is the previous statement true or false?

Issuing marketable permits to firms that produce a product with external costs will give the firms the incentive to

The production of a good or service by an authority that receives the most of its revenue from the government is referred to as

If the production of a good causes an external cost,then the efficient quantity is