Exam 10: Externalities and Property Rights

The view that firms emit pollution because they like to,or because they do not value the environment,is held by

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.Assume that Glen and his neighbours both know the payoffs to the three choices.If maintaining relations with his neighbours is valuable,Glen will likely choose

-Refer to the diagram above.If a positive externality exists in this market,the marginal social benefit from consuming this good at the competitive equilibrium output level is

The economist's view that complete elimination of pollution is undesirable stems from

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.The effect on society of having this pool of oil owned by four different people 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 issue of Bob,his neighbours,and the state of his lawn is an example of a(n)

Which of the following statements about common property rights is FALSE?

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.Given a goal of maximizing total economic surplus,a Coase theorem solution would result in

The two firms listed below have five different technologies for pollution control to choose from: 1,2,3,4 and 5.The amount of pollution emitted and the cost of the technologies are shown in the table.In the absence of government oversight,the firms will pick technology 1 and emit 4 tons each.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted. -Refer to the information above.Disunion Carbonated would be willing to pay __________,__________,__________,and __________ for the right to discharge 1,2,3,and 4 tons of pollution.

The existence of externalities results in

A motorist with a noisy muffler will continue to drive around town,creating noise pollution wherever he goes,as long as

From the individual's standpoint,a positional arms race is __________,while from society's point of view,it is __________.

If one major league baseball pitcher was to develop a new,highly effective pitch called the "slipper," this would be

All of the following are examples of externalities EXCEPT

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

-Refer to the diagram above.Suppose that Environment Canada requires that all automobiles have a certain air pollution technology that costs $700 per automobile.The reduction in air pollution will be

-Refer to the diagram above.With the appropriate tax rate imposed on producers,the socially optimal level of output would be _____ units at the socially optimal price of _____ per unit.

The two firms listed below have five different technologies for pollution control to choose from: 1,2,3,4 and 5.The amount of pollution emitted and the cost of the technologies are shown in the table.In the absence of government oversight,the firms will pick technology 1 and emit 4 tons each.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted. -Refer to the information above.Dewpoint would be willing to pay up to __________,__________,__________,and __________ for the right to discharge 1,2,3,and 4 tons of pollution.

When negative externalities are present in a market,it implies that

-Refer to the diagram above.If S1 contains the entire amount of the external cost,then