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Exam 17: Externalities

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Question 211

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An externality can be a cost or benefit arising from the production of a good that falls upon

A) consumers but not producers.
B) producers but not consumers.
C) both the consumer and the producer.
D) someone other than the consumer or producer.

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Question 212

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If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

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The presence of pollution means that the...

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Question 213

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How does the government determine the quota amount that will produce an efficient use of a common resource?

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the government subsidizes education, how much should the subsidy be in order to attain the efficient level of enrollment?

-In the above figure, what amount of subsidy per student would government have to provide to colleges if its desired objective was to achieve an efficient level of education, 50 million students per year?

-The tables above show the marginal costs and benefits from production of paper. The efficient level of output is ________ of paper.

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?

For a common resource, the marginal private cost of the resource is equal to the marginal social cost.

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

An externality can be a

-The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax. What is the tax per vehicle mile that will achieve the efficient outcome?

Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. The efficient level of output is

The Coase Theorem is the proposition that if the number of involved parties is low, if property rights ________ and transactions costs are ________, then private transactions are efficient.

An example of an activity that generates an external cost is

In 2008, a man was charged with one count of illegally stocking wild animals, a civil offense. State investigators had accused him of bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land, spawning a feral hog population that has caused thousands of dollars in crop damage to hundreds of farms in the region. The marginal external ________ of the man's movement of feral pigs is ________.

________ is the benefit that a consumer of a good or service receives.