Question 1

A positive externality results when

Accepted Answer

A)  economists are sure that a good or service provides benefits to consumers.
B)  someone pays for a good or service even though she is not directly affected by the production or consumption of it.
C)  when people who live in one country benefit from the production of a good or service that occurs in another country.
D)  people who are not directly involved in producing or paying for a good or service benefit from it.E) C) and D)
F) A) and C)

Question 2

How does the construction of a market demand curve for a private good differ from that for a public good?

Accepted Answer

A)  There is no difference;in both cases the demand curve is determined by adding up the price each consumer is willing to pay for each quantity of the good.
B)  There is no difference;in both cases the demand curve is determined by adding up the quantities demanded by each consumer at each price.
C)  The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price,but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.
D)  The market demand curve for a private good is determined by adding up the price each consumer is willing to pay for each quantity of the good,but the market demand curve for a public good is determined by adding up the quantities demanded by each consumer at each price.E) None of the above
F) A) and B)

Question 3

Figure 15-4 1 B) Q2 minus Q1 C) Q2 D) Q1 plus Q2" class="answers-bank-image d-inline" rel="preload" > 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 15-4 shows the paper market.Use this Figure to answer the following question(s) .
-Refer to Figure 15-4.What is the economically efficient output level?

Accepted Answer

A)  Q1
B)  Q2 minus Q1
C)  Q2
D)  Q1 plus Q2E) None of the above
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 15-7 B to QE units? A) PF B) PF × QE  C) the value of the area BEF D) the value of the area QBBFQE" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 15-7.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Accepted Answer

A)  PF
B)  PF × QE 
C)  the value of the area BEF
D)  the value of the area QBBFQEE) All of the above
F) A) and D)

Question 6

Governments can increase the consumption of a product that creates positive externalities by

Accepted Answer

A)  subsidising the production of the product so that the supply is increased and market price is reduced.
B)  taxing the production and consumption of the product.
C)  convincing everyone to consume the good.
D)  assigning property rights to the producers of the product.E) C) and D)
F) All of the above

Question 7

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

Accepted Answer

A)  elephants in the wild
B)  lions in a zoo
C)  a university education
D)  public transportationE) A) and B)
F) A) and C)

Question 8

Figure 15-9 2- P1) per ton of output B) (P2- P0) per ton of output C) (P1- P0) per ton of output D) P1 per ton of output" class="answers-bank-image d-inline" rel="preload" > Companies producing toilet paper bleach the paper to make it white.The bleach is discharged into rivers and lakes and causes substantial environmental damage.Figure 15-9 illustrates the situation in the toilet paper market.
-Refer to Figure 15-9.Suppose the government wants to use a Pigovian tax to bring about the efficient level of production.What should the value of the tax be?

Accepted Answer

A)  (P2- P1) per ton of output
B)  (P2- P0) per ton of output
C)  (P1- P0) per ton of output
D)  P1 per ton of outputE) A) and B)
F) A) and C)

Question 9

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Accepted Answer

A)  equal to the marginal external cost at the economically efficient level of pollution.
B)  equal to the marginal private cost of production at the economically efficient level of pollution.
C)  equal to the amount of the deadweight loss created in the absence of a pollution tax.
D)  at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.E) B) and C)
F) A) and B)

Question 10

For the Coase theorem to work,there must be clear assignment of property rights.

Accepted Answer

A) True 
 B)False

Question 11

The supply curve of a public goods shows

Accepted Answer

A)  the total quantities that all producers are willing and able to supply at each price.
B)  the maximum amount suppliers require to produce each quantity of the good.
C)  the total cost of producing each unit of the good.
D)  the marginal cost of producing each unit of the good.E) A) and B)
F) A) and C)

Question 12

State the Coase theorem.

Accepted Answer

The Coase theorem states that if transac...

Exam 15: Externalities, Environmental Policy and Public Goods

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

Correct Answer
verified

Governments can increase the consumption of a product that creates positive externalities by

Correct Answer
verified

Correct Answer
verified

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Correct Answer
verified

Correct Answer
verified

A positive externality results when

Correct Answer
verified

How does the construction of a market demand curve for a private good differ from that for a public good?

Correct Answer
verified

The supply curve of a public goods shows

Correct Answer
verified

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

Correct Answer
verified

State the Coase theorem.

Correct Answer
verified
The Coase theorem states that if transac...
View Answer

For the Coase theorem to work,there must be clear assignment of property rights.

Correct Answer
verified

Figure 15-7 -Refer to Figure 15-7.What is the incremental benefit of increasing the quantity of pollution reduction from Q_Bto Q_Eunits?

Correct Answer
verified

Exam 15: Externalities, Environmental Policy and Public Goods

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

Correct AnswerverifiedShow Answer

Governments can increase the consumption of a product that creates positive externalities by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A positive externality results when

Correct AnswerverifiedShow Answer

How does the construction of a market demand curve for a private good differ from that for a public good?

Correct AnswerverifiedShow Answer

The supply curve of a public goods shows

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

State the Coase theorem.

Correct AnswerverifiedThe Coase theorem states that if transac...View AnswerShow Answer

For the Coase theorem to work,there must be clear assignment of property rights.

Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Coase theorem states that if transac...
View Answer

Correct Answer
verified

Figure 15-7 -Refer to Figure 15-7.What is the incremental benefit of increasing the quantity of pollution reduction from Q_Bto Q_Eunits?

Correct Answer
verified