Question 1

A commodity or service whose consumption by one person does not preclude others from also consuming it is called a

Accepted Answer

A)   private good.
B)   public good.
C)   Giffen Good.
D)   Coase Good.E) A) and D)
F) None of the above

Question 2

The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called

Accepted Answer

A)   a Nash Equilibrium.
B)   Coase Theorem.
C)   Bargaining Theorem.
D)   English Bargaining.E) A) and C)
F) None of the above

Question 3

If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could

Accepted Answer

A)   issue rights to pollute worth 4 million tons and let the firms trade those rights in a market.
B)   appeal to firms' environmental conscience to pollute less.
C)   subsidize production.
D)   rely on the Coase Theorem.E) A) and B)
F) A) and C)

Question 4

Firms that are most likely to buy marketable pollution rights are those that produce the most pollution per unit of output produced.

Accepted Answer

A) True 
 B)False

Question 5

The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop.This is an example of

Accepted Answer

A)   synergy.
B)   a positive externality.
C)   a negative externality.
D)   happy coexistence.E) A) and B)
F) B) and D)

Question 6

In a market with positive externalities,

Accepted Answer

A)   the efficient level of production is less than what competition will obtain.
B)   the efficient level of production is equal to what competition will obtain.
C)   the efficient level of production is more than what competition will obtain.
D)   there cannot be an efficient level of production.E) All of the above
F) C) and D)

Question 7

If a production process generates pollution,then a competitive market will

Accepted Answer

A)   produce more of the good than is socially optimal.
B)   produce less of the good than is socially optimal.
C)   produce the socially optimal quantity of that good.
D)   produce zero output.E) B) and D)
F) B) and C)

Question 8

Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual.

Accepted Answer

A public good lacks rivalry,so many peop...

Question 9

The U.S.Federal government limits the ability for private firms to harvest timber on much government land.This,it is argued,increases the amount of fuel for wildfires which often burn out of control and cost money and manpower to control.

Accepted Answer

A)   This suggests that the policy addressing one positive externality might have created another positive externality.
B)   This suggests that those who harvest timber are prone to starting wildfires.
C)   This suggests that the policy addressing timber harvesting created a negative externality.
D)   This suggests that government policy is destined to fail.E) C) and D)
F) A) and C)

Question 10

When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

Accepted Answer

A) True 
 B)False

Question 11

The total demand for a public good is found by

Accepted Answer

A)   horizontally summing all individual demands.
B)   vertically summing all individual demands.
C)   finding the demand from the median voter.
D)   dividing the marginal cost of the good by the number of voters.E) C) and D)
F) B) and C)

Question 12

In the presence of a negative externality generated by producing a good,a competitive market will produce more of that good than is socially optimal.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that in the market for paper,demand is p = 100 - Q.The private marginal cost is
MCp = 10 + Q.Pollution generated during the production process creates external marginal harm equal to MCe = Q.What specific tax would result in a competitive market producing the socially optimal quantity of paper?

Accepted Answer

The socially optimal quantity of paper i...

Exam 18: Externalities, Open-Access, and Public Goods

When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

Correct Answer
verified

Firms that are most likely to buy marketable pollution rights are those that produce the most pollution per unit of output produced.

Correct Answer
verified

If a production process generates pollution,then a competitive market will

Correct Answer
verified

Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual.

Correct Answer
verified
A public good lacks rivalry,so many peop...
View Answer

In the presence of a negative externality generated by producing a good,a competitive market will produce more of that good than is socially optimal.

Correct Answer
verified

The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called

Correct Answer
verified

The total demand for a public good is found by

Correct Answer
verified

A commodity or service whose consumption by one person does not preclude others from also consuming it is called a

Correct Answer
verified

In a market with positive externalities,

Correct Answer
verified

The U.S.Federal government limits the ability for private firms to harvest timber on much government land.This,it is argued,increases the amount of fuel for wildfires which often burn out of control and cost money and manpower to control.

Correct Answer
verified

If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could

Correct Answer
verified

Correct Answer
verified
The socially optimal quantity of paper i...
View Answer

The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop.This is an example of

Correct Answer
verified

Exam 18: Externalities, Open-Access, and Public Goods

When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

Correct AnswerverifiedShow Answer

Firms that are most likely to buy marketable pollution rights are those that produce the most pollution per unit of output produced.

Correct AnswerverifiedShow Answer

If a production process generates pollution,then a competitive market will

Correct AnswerverifiedShow Answer

Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual.

Correct AnswerverifiedA public good lacks rivalry,so many peop...View AnswerShow Answer

In the presence of a negative externality generated by producing a good,a competitive market will produce more of that good than is socially optimal.

Correct AnswerverifiedShow Answer

The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called

Correct AnswerverifiedShow Answer

The total demand for a public good is found by

Correct AnswerverifiedShow Answer

A commodity or service whose consumption by one person does not preclude others from also consuming it is called a

Correct AnswerverifiedShow Answer

In a market with positive externalities,

Correct AnswerverifiedShow Answer

The U.S.Federal government limits the ability for private firms to harvest timber on much government land.This,it is argued,increases the amount of fuel for wildfires which often burn out of control and cost money and manpower to control.

Correct AnswerverifiedShow Answer

If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe socially optimal quantity of paper i...View AnswerShow Answer

The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop.This is an example of

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A public good lacks rivalry,so many peop...
View 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
The socially optimal quantity of paper i...
View Answer

Correct Answer
verified