Exam 10: Externalities and Property Rights

An external cost of an activity is one that is

An example of the way that externalities distort the allocation of resources is

Glen is considering whether to paint his house and if so,what colour to choose.He settles on three options: leave it "as is",paint it brown,or paint it purple.Glen's neighbours are able to easily see his house.The following table shows the monetary values of utility for Glen and his neighbours under the three possibilities. -Refer to the information above.The ranking of total economic surplus for Glen and his neighbours from highest to lowest is

-Which of the following situations is best illustrated by the diagram above?

-Refer to the diagram above.The distance __________ measures the __________.

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.It is likely that if a $5 toll from 8:00 a.m.to 9:00 a.m.was proposed,objections from drivers would be loud and vigorous.Suppose that the drivers propose building more roads.The impact of this would be to

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 $5000 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 $3000 more than his next best alternative. -Refer to the information above.Suppose that building the shopping centre and receiving $10,000 per month was $6000 more than Sid's next best alternative.As a result,

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.Adopting Plan B as the reward structure results in

The tragedy of the commons refers to the

The inefficiency induced by all positional arms races is that

Which of the following is NOT an example of a positional arms control agreement?

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.For Bob to have an unkempt lawn results in __________ because the total economic surplus is __________.

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 smallest whole number of dollars Bob would accept from his neighbours to keep a well groomed lawn is

Viewed from the perspective of a common property rights problem,reductions in the poaching of elephants for their ivory could be accomplished by

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.Plan A rewards

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.If the tournament adopts Plan B as its reward structure,then

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 $5000 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 $3000 more than his next best alternative. -Refer to the information above.The reciprocal nature of externalities expressed by Coase is illustrated by noting that

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.It is likely that a toll would reduce average commute times more effectively than a Coase theorem-styled,negotiated solution,because

Environment Canada has proposed strict controls on the amount of sulphur contained in diesel fuel.The effect of the regulation is estimated to increase the equilibrium price of a litre of diesel fuel by 10 cents.Assuming the supply curve of diesel fuel has a positive slope and the demand curve has a negative slope,one can infer that

Assume that reading produces a positive externality.It will be the case that the __________ than that which is socially optimal.