Question 1

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

Accepted Answer

While many people might like to see a mi

Question 2

In 2008, a man was charged with one count of illegally stocking wild animals, a civil offense. State investigators had accused him of bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land in 2002, spawning a feral hog population that has caused thousands of dollars in crop damage to hundreds of farms in the region. The marginal external ________ of the man's movement of feral pigs is ________.

Accepted Answer

A)  costs; negative. 
B)  benefits; positive 
C)  costs; positive. 
D)  benefits; negative 
A)  costs; negative. 
B)  benefits; positive 
C)  costs; positive. 
D)  benefits; negative

Question 3

The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights

Accepted Answer

A)  are granted solely to consumers. 
B)  are granted solely to producers. 
C)  are eliminated. 
D)  are granted to either consumers or producers and transactions costs are low. 
A)  are granted solely to consumers. 
B)  are granted solely to producers. 
C)  are eliminated. 
D)  are granted to either consumers or producers and transactions costs are low.

Question 4

If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

Accepted Answer

The presence of pollution means that the

Question 5

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

Accepted Answer

A) True 
 B)False

Question 6

Consider the production of some industrial good that involves air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q).   To arrive at the efficient market equilibrium the government could impose a tax of

Accepted Answer

A)  $3. 
B)  $4. 
C)  $8. 
D)  $9. 
A)  $3. 
B)  $4. 
C)  $8. 
D)  $9.

Question 7

With the debris of more than 50 years of climbing on the beautiful high slopes - oxygen canisters, tents, backpacks and even some bodies - Mount Everest has been called the world's highest garbage dump. Currently climbers must pay only a $3,000 trash-collection fee, which is woefully less than the actual cost of collecting trash. If climbers had to pay a higher trash-collection fee, the use of this common resource would

Accepted Answer

A)  become less efficient. 
B)  become more efficient. 
C)  not deviate from the current level of efficiency. 
D)  More information about who would collect the trash is needed 
A)  become less efficient. 
B)  become more efficient. 
C)  not deviate from the current level of efficiency. 
D)  More information about who would collect the trash is needed

Question 8

The production of paper creates pollution, an external cost. What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

Accepted Answer

When the government imposes a tax equal

Question 9

-In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon. The unregulated, competitive market for gasoline in Motorland

Accepted Answer

A)  produces the efficient quantity of gasoline. 
B)  overproduces by 0.2 million gallons of gasoline a month. 
C)  underproduces by 0.1 million gallons of gasoline a month. 
D)  overproduces by 0.1 million gallons of gasoline a month. 
A)  produces the efficient quantity of gasoline. 
B)  overproduces by 0.2 million gallons of gasoline a month. 
C)  underproduces by 0.1 million gallons of gasoline a month. 
D)  overproduces by 0.1 million gallons of gasoline a month.

Question 10

-In the figure above, if the market is unregulated, then at the equilibrium output level, the marginal social cost of production

Accepted Answer

A)  is less than the marginal benefit to consumers. 
B)  exceeds the marginal benefit to consumers. 
C)  equals the marginal benefit to consumers. 
D)  equals the marginal private cost of production. 
A)  is less than the marginal benefit to consumers. 
B)  exceeds the marginal benefit to consumers. 
C)  equals the marginal benefit to consumers. 
D)  equals the marginal private cost of production.

Question 11

If the marginal private cost of producing one kilowatt of power in California equals five cents and the marginal social cost of each kilowatt equals nine cents, then the marginal external cost equals ________ per kilowatt.

Accepted Answer

A)  five cents 
B)  nine cents 
C)  four cents 
D)  fourteen cents 
A)  five cents 
B)  nine cents 
C)  four cents 
D)  fourteen cents

Question 12

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that

Accepted Answer

A)  polluters are taxed on the amount of pollution they discharge. 
B)  emission charges are established by the government. 
C)  each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution. 
D)  only some producers pollute and the others go out of business. 
A)  polluters are taxed on the amount of pollution they discharge. 
B)  emission charges are established by the government. 
C)  each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution. 
D)  only some producers pollute and the others go out of business.

Question 13

The tragedy of the commons is the absence of incentives to

Accepted Answer

A)  correctly measure the marginal social benefit from a common resource. 
B)  prevent under use of the common resource. 
C)  prevent overuse and depletion of a common resource. 
D)  discover the common resource. 
A)  correctly measure the marginal social benefit from a common resource. 
B)  prevent under use of the common resource. 
C)  prevent overuse and depletion of a common resource. 
D)  discover the common resource.

Question 14

For a common resource, the equilibrium with no government intervention is such that ________ is less than ________.

Accepted Answer

A)  marginal private cost; marginal social benefit 
B)  marginal social benefit; marginal social cost 
C)  marginal private benefit; marginal social benefit 
D)  total social benefit; total social cost 
A)  marginal private cost; marginal social benefit 
B)  marginal social benefit; marginal social cost 
C)  marginal private benefit; marginal social benefit 
D)  total social benefit; total social cost

Question 15

Explain how a Pigovian tax works.

Accepted Answer

A Pigovian tax is a method of dealing wi

Question 16

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, the marginal cost of the externality is ________ per unit.

Accepted Answer

A)  $3 
B)  $4 
C)  $6 
D)  $7 
A)  $3 
B)  $4 
C)  $6 
D)  $7

Question 17

When external costs are present,

Accepted Answer

A)  competitive, unregulated markets are efficient. 
B)  transaction costs will be high. 
C)  a tax might be able to create efficiency. 
D)  property rights have already been established. 
A)  competitive, unregulated markets are efficient. 
B)  transaction costs will be high. 
C)  a tax might be able to create efficiency. 
D)  property rights have already been established.

Question 18

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

Accepted Answer

The marginal social cost equals the marg

Question 19

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. Without regulation, ________ tons of paper will be produced and the price will be ________ per ton.

Accepted Answer

A)  3; $150 
B)  4 ;$100 
C)  4; $200 
D)  None of the above answers is correct. 
A)  3; $150 
B)  4 ;$100 
C)  4; $200 
D)  None of the above answers is correct.

Question 20

When CSU sophomore Cody Clow and his housemates chose not to heed the city's ordinance against unreasonable noise and host a loud party at their off-campus residence last fall, they were confronted and ticketed by police. Fort Collins city code describes unreasonable noise as any sound that will "unreasonably interfere with the enjoyment of life or property." What is true about this situation?

Accepted Answer

A)  Marginal external costs are positive. 
B)  Marginal external costs are negative. 
C)  Marginal external benefits are positive. 
D)  Marginal external benefits are negative. 
A)  Marginal external costs are positive. 
B)  Marginal external costs are negative. 
C)  Marginal external benefits are positive. 
D)  Marginal external benefits are negative.

Exam 17: Externalities and the Environment

Use the idea of external costs to explain why some cities have laws against late-night rock concerts.

The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights

If the production of a good causes pollution (an external cost) is the unregulated competitive market equilibrium of that product efficient?

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

The production of paper creates pollution, an external cost. What happens to the production of paper if the government imposes a tax on paper producers equal to the marginal external cost of the pollution?

-In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon. The unregulated, competitive market for gasoline in Motorland

-In the figure above, if the market is unregulated, then at the equilibrium output level, the marginal social cost of production

If the marginal private cost of producing one kilowatt of power in California equals five cents and the marginal social cost of each kilowatt equals nine cents, then the marginal external cost equals ________ per kilowatt.

The government can aid in reducing pollution by using a policy of cap-and-trade, which means that

The tragedy of the commons is the absence of incentives to

For a common resource, the equilibrium with no government intervention is such that ________ is less than ________.

Explain how a Pigovian tax works.

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, the marginal cost of the externality is ________ per unit.

When external costs are present,

If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. Without regulation, ________ tons of paper will be produced and the price will be ________ per ton.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

For a common resource, the equilibrium with no government intervention is such that is less than .

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. Without regulation, tons of paper will be produced and the price will be per ton.