Exam 10: Externalities and Property Rights

Refer to the graph below,where MSC is the marginal social cost and MSB is the marginal social benefit. If external benefits could be internalized,the competitive equilibrium price would be __________ per unit and the competitive equilibrium quantity would be _______ units.

-Refer to the diagram above.Leaving the free market to decide on production,output would be _____ units and price would be ____ per unit.

Suppose that a vaccine is developed for a highly contagious strain of flu.The likelihood that anyone will get this flu decreases as more people receive the vaccine. -The dollar value of the external ______ is _____.

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 A as its reward structure,then

-Refer to the diagram above.Assume that a Coase theorem solution (private negotiation)is impractical.The efficient equilibrium could be achieved by

The major implication of the Coase theorem is that

If the price the public pays for a good is above the marginal cost of producing the good,then

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.Given the marginal cost of drilling a well of $94 and the total number of wells each landowner will therefore drill,each well will

When some fraction of the benefit of an activity is received by people not participating in the activity,it is called a(n)

According to Coase,when thinking about solutions to externalities,it is important to remember that

For a fixed-percentage reduction in pollution emissions to be economically efficient,it would have to be the case that

The reason public restrooms on the Trans-Canada Highway are generally less clean than restrooms at gas stations along the highway is that

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.Suppose that an additional rule is adopted: maximize total economic surplus but no outcome with a negative value for either Glenn or his neighbours can be chosen.The outcome now is that Glen's house will

The advantage of selling pollution permits rather than using a fixed-percentage reduction for all firms is

An external benefit of an activity is one that is

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.To avoid working all day and all night as their employer offers more and more overtime,Don and Steve could

-In the market,an externality exists.From the diagram above,one can deduce that it is a

Suppose that a vaccine is developed for a highly contagious strain of flu.The likelihood that anyone will get this flu decreases as more people receive the vaccine. -Private incentives will lead to _____ people receiving the vaccine at a cost of _____.

If the flu vaccine is provided by private markets,deadweight loss will be _______.

Which one of the following factors would NOT lessen the ability of the Coase theorem to solve an externality?