Exam 10: Externalities and Property Rights

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 least Sid would accept to cease construction of the shopping centre is

-Refer to the diagram above.An Environment Canada requirement for a $700 air pollution control device for all cars would__________ the socially optimal reduction in pollution because __________.

After correcting an externality,the equilibrium price and quantity both rose.The externality must have been a(n)

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.The highway to downtown is currently treated as __________,with the price __________.

-Refer to the diagram above.If this market has no externalities,the marginal social cost from consuming this good at the competitive equilibrium output level 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.Suppose that Bob knows that his neighbours value his lawn being well groomed more than he does and demands $15 from them.The neighbours will

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 the firm that employs both Don and Steve begins to offer one hour of overtime.It is likely that

Brady owns a beachfront lot with a small house.During hurricanes,he refuses to leave and afterward he applies for government assistance to rebuild and files insurance claims for damages.By doing so,Brady is

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.The reason drivers would prefer building new roads to a $5 toll to reduce commute times is that

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.Since Plan A causes __________,this is an example of a(n)__________.

Limits on the extent of private property rights,e.g. ,zoning laws,are

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

If an unregulated activity produces a negative externality,one can infer that the

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 quality of play is measured by low scores and a close finish,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 $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 view of the undeveloped area Paul has been enjoying is a(n)

-Refer to the diagram above.The reason the invisible hand does not allocate resources efficiently in the market is that

When evaluation of one's performance is based on a comparison with how others performed,

The least-cost solution for the distribution of pollution abatement among polluters 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

The major difficulty with using a tax on pollution instead of a fixed-percentage reduction regulation is