Exam 18: Externalities and Public Goods

When one party suffers negative external effects due to the actions of another party, a lawsuit may not lead to the efficient outcome if:

Use the following statements to answer this question: I. Stock externalities depend on the accumulated results of actions by producers or consumers, not on the incremental results that may occur in a given period of time. II. Stock externalities are always negative externalities.

Although digital storage costs have declined sharply in the past few years, many universities and companies still have limited storage space for email messages and impose a fixed limit on the amount of file storage space per user. May we view this as a common property resource problem, and do the fixed limits resolve the problem?

If a firm had a fixed proportions technology, then the pollution produced by this firm

A plastics factory emits water pollutants into a nearby river. The marginal private cost of producing plastics and the marginal external cost of the pollutants are both constant with respect to the quantity of plastics produced. If the demand for plastics is downward sloping, what happens to the socially optimal level of output and market price if the demand curve for plastics shifts rightward?

The city of Econoville currently charges a fee of $0.50 to residents for each 50 gallon can of trash the city garbage service collects from their residence. A 50 gallon can of recyclable trash costs a resident $3.50 to be collected. The marginal social cost of garbage disposed is: MSC_d (g_d) = 12.50 where g_d is a 50 gallon drum of garbage disposed. The marginal social cost of garbage recycled is: MSC_r (g_r) = 2.50 g_r. The marginal benefit function of garbage removed from residences is: MB(g_d, g_r) = 800 - 2(g_d + g_r). Given the payment plan for garbage disposal, what level of garbage are the city residents disposing each year? How much will each resident recycle with this payment plan? Is this level of disposal and recycling efficient? Why or why not? What is the optimal level of garbage disposed and garbage recycled in Econoville? How can Econoville encourage residents to dispose and recycle the optimal amounts of garbage?

Smog Corporation and Grimy Corporation emit pollution in their production processes. The local government has established a standard for the pollution levels of Smog Corporation and Grimy Corporation of 25,000 units of pollution. To ensure this level of pollution, the government has allocated 15,000 pollution permits to Smog Corporation and 10,000 pollution permits to Grimy Corporation. Smog Corporation has the following demand function for pollution emission permits: ₌ 15,000 - . Grimy Corporation's demand function for pollution emission permits is: = 13,000 - . Is the government's allocation of pollution permits efficient? If the government allowed the corporations to trade permits, would the firms be motivated to trade? If so, what would be the efficient level of trading?

Because trucking as an industry involves the generation of pollutants in engine exhaust,

As you move rightward on a marginal cost of abatement curve, emissions are

What type of good is clean air?

Suppose the private marginal cost of pumping water from an aquifer remains constant as the quantity of water pumped increases, and the marginal social cost is upward sloping. If the demand for water shifts to the right as population increases, then the amount of water pumped based only on private costs ________ and the social cost of the common property resource ________.

The European demand for access to satellite transmissions can be divided into three groups: A, B, and C. The demand curves for the three groups are: P_A = 500 - 2Q_A (for Q < 250) P_B = 300 - Q_B (for Q < 300) P_C = 400 - 2Q_C (for Q < 200), where Q = number of hours access per month, and P = price per hour. Satellite transmission is a pure public good with zero marginal cost. a. Explain the difference between horizontal and vertical summation of demand curves. Derive the horizontally and vertically summed demand curves. Explain the circumstances under which vertical summation is appropriate. When is horizontal summation appropriate? b. Determine the efficient quantity of satellite service. Explain the process of finding the efficient quantity including a justification for the demand curve. What price is optimal?

To find the social marginal benefit of public goods, one needs to

The marginal benefit and marginal private cost curves for aphrodisiacs are given as follows: MB = 200 - Q MPC = Q In addition to private costs, there is a marginal external cost of $10 per unit of output. What is the efficient level of output?

Access to the movie "Casablanca," showing in a half-empty theater, is

Loud music from a neighbor's party is

To enforce the optimum level of emissions, a government could set an emissions fee, which would be

Figure 18.1 All producers in the corbomite industry dump wastes in the river in the production of their output. -Given the information in Figure 18.1, the competitive output in the corbomite industry is:

Because of the kind of externalities that tend to be generated from general R&D resources bought by firms, the equilibrium price of R&D

The provision of an education in public school is