Exam 10: Externalities and Property Rights

The following data show the relationship between the number of drivers who leave for work at 8:00 a.m. ,their average commute times,and their marginal benefit associated with the commute times. -Refer to the data above.Suppose that a toll is imposed in the following way: leaving between 8:00 a.m.and 9:00 a.m.costs $5 per driver,while after 9:00 a.m.the toll is zero.One can predict that __________ drivers will leave after 9:00 a.m.

If,after an externality is corrected,the equilibrium price rises and the equilibrium quantity falls,the externality must have been a(n)

Limitations on private property rights are

Since trash generation involves an externality,economists would answer the problem of trash generation by

-Refer to the diagram above.The socially optimal reduction in air pollution due to automobiles is

By the mid 1970s,the U.S.and the U.S.S.R.had sufficient nuclear weapons to destroy the entire world several times,yet both countries continued to build more.The plausible explanation for this behaviour is

The three firms below have five choices for pollution control: no controls or four different technologies,W,X,Y and Z.The amount of pollution emitted and the cost of the technologies are shown in the table. -Refer to the information above.Suppose that the government imposes a tax of $1400 per ton of pollution.As a result,pollution emissions are __________ tons and the total private cost is __________.

It is always the case that

If a negative externality exists in the production of paper and paper is sold in a perfectly competitive market,then the equilibrium output

Unkind jokes and sarcastic remarks about whether someone has had cosmetic plastic surgery are a(n)

Which of the following is an example of a governmental solution to an external benefit?

Bob lives in a residential neighbourhood that takes pride on well-groomed lawns.Bob's neighbours find that the marginal benefit of someone else's well-groomed lawn is $10.Bob,however,receives the same net benefit from an unkempt lawn as a well-groomed lawn: zero (an unkempt lawn looks bad but costs nothing;a well groomed lawn looks nice but is costly). -Refer to the information above.The Coase theorem suggests that

-Refer to the diagram above.Taxing the production of this good by an amount equal to the external cost would

Bob lives in a residential neighbourhood that takes pride on well-groomed lawns.Bob's neighbours find that the marginal benefit of someone else's well-groomed lawn is $10.Bob,however,receives the same net benefit from an unkempt lawn as a well-groomed lawn: zero (an unkempt lawn looks bad but costs nothing;a well groomed lawn looks nice but is costly). -Refer to the information above.The largest whole number of dollars Bob's neighbours would pay him to keep a well groomed lawn is

When collective action is taken,e.g. ,the passing of a new law,it is frequently an attempt to

The major implication of the _______ is that individuals can solve many externalities if they can buy and sell the right to generate the externality.