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Exam 16: Externalities

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Question 51

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Use the table below to answer the following questions. Table 16.2.1 -Refer to Table 16.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.If the government decides to correct the externality problem, it could

A) subsidize production by $20 per unit.
B) subsidize production by $10 per unit.
C) provide the good itself.
D) tax production by $10 per unit.
E) tax production by $20 per unit.

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Question 52

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Three ways governments can encourage production of goods with external benefits are

A) private subsidies, pollution permits, and intellectual property rights.
B) private subsidies, pollution permits, and vouchers.
C) intellectual property rights, pollution permits, and vouchers.
D) taxes, emission charges, and pollution permits.
E) private subsidies, vouchers, and intellectual property rights.

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Question 53

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Which of the following illustrates the concept of external cost?

Use the figure below to answer the following questions. Figure 16.3.3 -Refer to Figure 16.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.Society's external benefit from university graduates is $10,000 each.With no subsidy,

Use the table below to answer the following questions. Table 16.2.2 Chemical Fertilizer Market -Refer to Table 16.2.2.The Pigovian tax that achieves the efficient quantity of output is

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve.If a subsidy is granted that generates an efficient quantity, then the quantity produced is

When the production of a good has an external cost, the

If negative externalities exist, then in a market with no property rights,

Which one of the following is a means of coping with a negative externality?

A system of cap-and-trade is used to reduce acid rain caused by emissions from electric power utilities.Which of the following statements is true?

A battery acid producer pollutes the water upstream from the Polar Bear Club, a swimming club.If transactions costs are low, the quantity of pollution will be efficient

A private cost of production is a cost that is borne by the ________ of a good or service. A social cost of production is a cost that is ________.

The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to

A patent is an example of

Environment Canada was created in

A private subsidy on a good

CoolU has solved its smoking problem by allocating each student 5 smoking permits a day, and allowing trading.This is an example of

Consider some type of industrial pollution that generates air pollution.This industry, if left unregulated, will produce

An externality is

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve.If production is left to the private market, then the price is