Question 1

Patent protection is one way to deal with technology spillovers.

Accepted Answer

A) True 
 B)False

Question 2

To economists,good environmental policy begins by acknowledging one of the Ten Principles of Economics:

Accepted Answer

A)   Trade can make everyone better off.
B)   People face trade-offs.
C)   Markets are usually a good way to organize economic activity.
D)   A country's standard of living depends on its ability to produce goods and services.E) All of the above
F) A) and B)

Question 3

Alexander lives in an apartment building and gets a $250 benefit from playing his stereo.Mary,who lives next door to Alexander and often loses sleep due to the loud music coming from Alexander's stereo,bears a $350 cost from the noise.Mary would like to offer Alexander some money to turn down the volume on his stereo.If Mary had to hire a lawyer to draw up the contract,what is the maximum amount she could pay to the lawyer to ensure that both Alexander and Mary would benefit from the agreement?

Accepted Answer

A)   an amount less than $100
B)   an amount between $100 and $250
C)   an amount between $250 and $350
D)   Any amount could result in both parties benefiting from the agreement.E) All of the above
F) B) and D)

Question 4

Table 10-6
The following table shows the total costs for each of four firms (A,B,C,and D) to eliminate units of pollution from their production processes.For example,for Firm A to eliminate one unit of pollution,it would cost $46,and for Firm A to eliminate two units of pollution,it would cost a total of $103.
 
-Refer to Table 10-6.Suppose there is presently no pollution fee,and the government wishes to eliminate exactly 11 units of pollution.Which of the following fees per unit of pollution would achieve that goal?

Accepted Answer

A)   $60
B)   $70
C)   $76
D)   $88E) All of the above
F) None of the above

Question 5

A former senator remarked that "We cannot give anyone the option of polluting for a fee." Do most economists agree with this statement,or do they disagree with it?

Accepted Answer

Most econo...

Question 6

Suppose that a firm produces electricity by burning coal.The production process creates a negative externality of air pollution.If the firm does not internalize the cost of the externality,it will produce where

Accepted Answer

A)   the value of electricity to consumers equals the private cost of producing electricity.
B)   the value of electricity to consumers equals the social cost of producing electricity.
C)   the cost of the externality is maximized.
D)   the transaction costs of private bargaining are minimized.E) B) and D)
F) A) and C)

Question 7

Firms that can reduce pollution easily would be willing to sell their pollution permits.

Accepted Answer

A) True 
 B)False

Question 8

When firms internalize a negative externality,the market supply curve shifts to the left.

Accepted Answer

A) True 
 B)False

Question 9

Figure 10-19 
-Refer to Figure 10-19.How many units of the good are produced in a market equilibrium?

Accepted Answer

A)   fewer than 58
B)   58
C)   73
D)   94E) None of the above
F) B) and C)

Question 10

Figure 10-19 
-Refer to Figure 10-19.Note that the lines labeled "Demand" and "Social Value"are parallel.Also,the slopes of the lines on the graph reflect the following facts: (1) Private value and social value decrease by $1.00 with each additional unit of the good that is consumed,and (2) private cost increases by $1.40 with each additional unit of the good that is produced.Thus,when the 74th unit of the good is produced and consumed,social well-being

Accepted Answer

A)   decreases by $2.40.
B)   decreases by $1.60.
C)   increases by $1.00.
D)   increases by $1.40.E) A) and B)
F) A) and C)

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   Tradable pollution permits have an advantage over corrective taxes if the government is uncertain as to the optimal size of the tax necessary to reduce pollution to a specific level.
B)   Both corrective taxes and tradable pollution permits provide market-based incentives for firms to reduce pollution.
C)   Corrective taxes set the maximum quantity of pollution,whereas tradable pollution permits fix the price of pollution.
D)   Both corrective taxes and tradable pollution permits reduce the cost of environmental protection and thus should increase the public's demand for a clean environment.E) None of the above
F) All of the above

Question 12

Figure 10-11 th unit of output is $16. B)  The social value of the 160th unit of output is $28. C)  The external benefit of the 160th unit of output is $6. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10-11.Which of the following statements is correct?

Accepted Answer

A)   The private value of the 160th unit of output is $16.
B)   The social value of the 160th unit of output is $28.
C)   The external benefit of the 160th unit of output is $6.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 13

When a transaction between a buyer and seller directly affects a third party,the effect is called an externality.

Accepted Answer

A) True 
 B)False

Question 14

Figure 10-1 
-Refer to Figure 10-1.This graph represents the tobacco industry.The socially optimal price and quantity are

Accepted Answer

A)   $1.90 and 38 units,respectively.
B)   $1.80 and 35 units,respectively.
C)   $1.60 and 42 units,respectively.
D)   $1.35 and 58 units,respectively.E) A) and B)
F) All of the above

Question 15

The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities.

Accepted Answer

A) True 
 B)False

Question 16

Using a supply and demand diagram,demonstrate how a positive externality leads to market inefficiency.How might the government help to eliminate this inefficiency?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> When a positive externality exists,the ...

Question 17

Which of the following statements is correct?

Accepted Answer

A)   Because a clean environment is a public good,a feasible goal is to eliminate all pollution,regardless of the cost.
B)   Rich countries usually have cleaner environments than poor countries because a clean environment is like other normal goods in that it has a positive income elasticity.
C)   Clean water and clean air are priceless goods.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 18

Figure 10-16 
-Refer to Figure 10-16.This graph shows the market for pollution when permits are issued to firms and traded in the marketplace.In the absence of a pollution permit system,the quantity of pollution would be

Accepted Answer

A)   25
B)   50
C)   75
D)   100E) A) and D)
F) None of the above

Question 19

Which of the following would not be considered a negative externality?

Accepted Answer

A)   Smelter,Inc.creates steel and pollution.
B)   Your friend buys a new puppy that barks every night.
C)   You have an adverse reaction to a medication your doctor prescribed for you.
D)   Your neighbor plays loud music that you dislike through stereo speakers set up on his deck.E) B) and D)
F) None of the above

Question 20

Does research into new technologies create a positive externality or does it create a negative externality?

Accepted Answer

Research into new te...

Exam 10: Externalities

Correct Answer
verified

Correct Answer
verified

When a transaction between a buyer and seller directly affects a third party,the effect is called an externality.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Suppose that a firm produces electricity by burning coal.The production process creates a negative externality of air pollution.If the firm does not internalize the cost of the externality,it will produce where

Correct Answer
verified

Figure 10-11 -Refer to Figure 10-11.Which of the following statements is correct?

Correct Answer
verified

A former senator remarked that "We cannot give anyone the option of polluting for a fee." Do most economists agree with this statement,or do they disagree with it?

Correct Answer
verified
Most econo...
View Answer

Figure 10-16 -Refer to Figure 10-16.This graph shows the market for pollution when permits are issued to firms and traded in the marketplace.In the absence of a pollution permit system,the quantity of pollution would be

Correct Answer
verified

The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities.

Correct Answer
verified

Patent protection is one way to deal with technology spillovers.

Correct Answer
verified

Firms that can reduce pollution easily would be willing to sell their pollution permits.

Correct Answer
verified

When firms internalize a negative externality,the market supply curve shifts to the left.

Correct Answer
verified

Figure 10-1 -Refer to Figure 10-1.This graph represents the tobacco industry.The socially optimal price and quantity are

Correct Answer
verified

Correct Answer
verified

To economists,good environmental policy begins by acknowledging one of the Ten Principles of Economics:

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Figure 10-19 -Refer to Figure 10-19.How many units of the good are produced in a market equilibrium?

Correct Answer
verified

Using a supply and demand diagram,demonstrate how a positive externality leads to market inefficiency.How might the government help to eliminate this inefficiency?

Correct Answer
verified
When a positive externality exists,the ...
View Answer

Which of the following would not be considered a negative externality?

Correct Answer
verified

Does research into new technologies create a positive externality or does it create a negative externality?

Correct Answer
verified
Research into new te...
View Answer

Exam 10: Externalities

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a transaction between a buyer and seller directly affects a third party,the effect is called an externality.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose that a firm produces electricity by burning coal.The production process creates a negative externality of air pollution.If the firm does not internalize the cost of the externality,it will produce where

Correct AnswerverifiedShow Answer

Figure 10-11 -Refer to Figure 10-11.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A former senator remarked that "We cannot give anyone the option of polluting for a fee." Do most economists agree with this statement,or do they disagree with it?

Correct AnswerverifiedMost econo...View AnswerShow Answer

Figure 10-16 -Refer to Figure 10-16.This graph shows the market for pollution when permits are issued to firms and traded in the marketplace.In the absence of a pollution permit system,the quantity of pollution would be

Correct AnswerverifiedShow Answer

The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities.

Correct AnswerverifiedShow Answer

Patent protection is one way to deal with technology spillovers.

Correct AnswerverifiedShow Answer

Firms that can reduce pollution easily would be willing to sell their pollution permits.

Correct AnswerverifiedShow Answer

When firms internalize a negative externality,the market supply curve shifts to the left.

Correct AnswerverifiedShow Answer

Figure 10-1 -Refer to Figure 10-1.This graph represents the tobacco industry.The socially optimal price and quantity are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To economists,good environmental policy begins by acknowledging one of the Ten Principles of Economics:

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Figure 10-19 -Refer to Figure 10-19.How many units of the good are produced in a market equilibrium?

Correct AnswerverifiedShow Answer

Using a supply and demand diagram,demonstrate how a positive externality leads to market inefficiency.How might the government help to eliminate this inefficiency?

Correct Answerverified When a positive externality exists,the ...View AnswerShow Answer

Which of the following would not be considered a negative externality?

Correct AnswerverifiedShow Answer

Does research into new technologies create a positive externality or does it create a negative externality?

Correct AnswerverifiedResearch into new te...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Most econo...
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When a positive externality exists,the ...
View Answer

Correct Answer
verified

Correct Answer
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Research into new te...
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