Exam 17: Externalities and the Environment

A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. Which of the following best explains why the negative externality faced by the class arises?

In order to increase society's total welfare, a production process that produces a negative externality should be

The optimal level of pollution occurs where the marginal social benefit is equal to

Exhibit 17-1 -In Exhibit 17-1, the equilibrium level of output determined by private decisions is

If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost,

Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold. Other things equal,

Control of water pollution from pesticide runoff in the United States is the responsibility of

Mountain bikers and rollerbladers share the only trail in a city park. The city allows everyone into the park and onto the trail. The mountain bikers say the rollerbladers are a hazard to them; the rollerbladers say it's the other way around. Frequently there are collisions, and many injuries occur. What is the property rights problem?

Exhibit 17-1 -If technology is fixed, the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by

In the United States, federal efforts to clean up the environment are coordinated by the

Pollution taxes are paid out of the EPA Superfund in order to reduce automobile emissions.

A metal-stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to nap. It would cost the factory $5 million to move; it would cost $1 million for the day care center to move. Sound insulation for the factory costs $1 million; insulation for the day care center costs $200,000. The court determines that the day care center has the property right. What would be the optimal solution to this problem?

The Clean Air Act of 1970 has

Environmental problems result when social costs and benefits are different from private costs and benefits.

At the market output and price for a good whose production causes pollution,

The May 2007 report from the Intergovernmental Panel on Climate Change suggested reforms that would not require any lifestyle changes.

When an activity results in the creation of external benefits, markets will produce more than the socially optimal level of that activity.

If education creates positive externalities,

Education confers positive externalities because

The common pool problem