Exam 10: Externalities and Property Rights

Refer to the graph below. Assuming a marginal external cost equal to the tax shown in the above graph,the per -unit tax necessary to induce consumers to purchase the socially optimal quantity each year is

The motivation for private solutions to externalities is that

Cigarettes are known to cause negative externalities.Which one of the following will help to reduce the consumption of cigarettes?

Suppose that four land owners,A,B,C,and D,own adjacent lots.Recently,a pool of oil was discovered that is under all four lots but does not extend beyond the four lots.Below is information on the relationship between number of oil wells,output per well and revenue per well. -Refer to the information above.If the marginal cost of drilling a well is $94,then each land owner will drill __________ wells for a total of __________ wells.

Which of the following programs would most likely NOT be acceptable to an economist to reduce pollution caused by newspaper production?

Adam and Jon are the only players playing in a local golf tournament.They can either practice for 5 hours or not practice at all.Practice has both direct monetary costs and opportunity costs.Their scores for an 18-hole round of golf with and without practice are shown in the table.Total prize money is $12,000.Two possible reward structures exist.In Plan A,the low score wins $10,000,second place wins $2000,and a tie results in $6000 each.Plan B requires a player to score 71,or less,for first place,72 to 80 is considered second place.The $10,000 will be split between those with a 71 or lower score,with a guaranteed minimum of $2000.The $2000 for second will be split between those with a score between 72 and 80. -Refer to the information above.Under the reward structure of Plan B,

Dustin owns a very powerful stereo system.Dustin's private property rights allow him to do all of the following except to

For the sake of argument,assume that Conservative voters are both wealthier and more likely to make campaign contributions than Liberal voters.One could then predict that

A positional externality

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.If the highway is viewed as having a zero price,one can predict that __________ drivers will leave for downtown at 8:00 a.m.

If a positive externality exists in the provision of a good that is provided in a perfectly competitive market without government intervention,then,at the market equilibrium level of output,

Compared to a fixed-percentage reduction regulation,a tax on pollution encourages

A resource that has private property rights is

This diagram shows the costs incurred by firm A and firm B as they reduce the pollution from their factories.MACA represents the marginal abatement cost for firm A and MACB represents the marginal abatement cost for firm B. -Refer to the diagram above.Suppose that the government imposes a tax of $200 per tonne of pollution per day.As a result,firm A will reduce pollution by _______ tonne(s)per day and firm B will reduce pollution by _________ tonne(s)per day.

Refer to the graph below. The tax illustrated in the above graph,that makes the marginal private cost equal to the marginal social cost,is appropriate for correcting

Which of the following would NOT be a consequence of switching entirely from fixed-percentage pollution reduction regulations to either a pollution tax or pollution permits?

Steve and Don are neighbours who work at the same firm and hold the same title.Steve finds that when Don's consumption rises,he feels worse off.Don feels the same way towards Steve's consumption. -Refer to the information above.Suppose that Don buys a new Lexus.It would not be surprising to then observe Steve

If the external benefit of an activity is added to the private benefit,then the

Paul owns a home on the top of a hill and enjoys an unobstructed view of a large wooded area.The view was a large factor in his decision to buy the house and Paul values his view at $5,000 per month.Sid purchases the undeveloped wooded area with plans to build a retail shopping centre.Sid expects to earn $10,000 a month from the shopping centre,which is $3,000 more than his next best alternative. -Refer to the information above.The difference between the value Paul receives from the view and his payment for the view is

An environmental activist describes an Environment Canada requirement for a $700 air pollution control device for all cars as a policy that leads to the socially optimal reduction in pollution.In terms of the diagram above,for this to be true,it must be the case that the