Exam 17: Externalities and the Environment

-The table above gives the private costs and external costs of producing paper. a) Complete the table by finding the marginal social cost at each level of production. b) If the market is competitive and is left unregulated and 400 tons of paper are produced, what is the price of a ton of paper? c) If the government imposes a tax equal to the external cost at each level of production, what price would be charged if 400 tons are produced?

"The problem with a common resource is that no one gets to use the resource." Comment on the preceding assertion.

The Coase theorem applies when property rights are given

Why do firms ignore external costs when they pollute?

If a good has zero external costs, then

A marginal external cost is the cost of producing an additional unit of a good that falls on the producer.

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive, what government policy might move the market closer to efficiency?

In which of the following cases does the tragedy of the commons occur? I. Cattle grazing on private ranches. II) Catching lobsters off the coast of Florida. III) Raising salmon on salmon farms. IV) Using legal services provided by the courts.

-The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal external cost is

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, the equilibrium quantity of steel is ________ tons and the efficient quantity of steel is ________ tons.

Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table: Which of the following is true?

What are ITQs? Where are they used?

An individual transferable quota can be used to achieve the

The marginal private cost of a chemical is $100 per ton and its marginal external cost is $20 per ton. What is the marginal social cost of the chemical?

In the figure above, if no one owns the lake the tax that achieves the efficient outcome is ________ per ton of pesticide produced.

For a common resource, efficiency requires that the ________ equals the ________.

The three main methods that governments use to cope with an external cost of production include all of the following EXCEPT

Using the Coase theorem, why might a firm that currently pollutes a river no one owns pollute the river less if it owned the river?

-The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. An efficient allocation of resources occurs at

According to the Coase theorem, which of the following are necessary for the efficient levels of pollution to be achieved? I. Property rights are defined. II) Transactions costs are low.