Exam 31: Market Failure: Externalities, Public Goods, and Asymmetric Information

If a person who generates a negative externality incorporates into his or her private cost-benefit calculations the effects that this externality will have on third parties,the externality has been

Hank goes to a Korean restaurant for the first time and he has no prior knowledge of Korean.He orders the Daenjang Chigae prepared medium hot and hopes for the best.Here an information __________ is __________ a market outcome.

If the consumption of a good by one person reduces its consumption by others,then the good is

Ronald Coase stressed the necessity of using taxes to internalize negative externalities.

Exhibit 31-1 -Refer to Exhibit 31-1.If the exhibit represents a negative externality situation,the net social cost of expanding output from Q₁ to Q₂ is the area of

A good is nonexcludable if no externalities,either negative or positive,are associated with its production or consumption.

When negative externalities are connected with the production of a good,

The government's provision of nonexcludable public goods such as national defense is accepted because

A negative externality exists when

Exhibit 31-5 -Refer to Exhibit 31-5.If a positive externality exists,then curve __________ represents the marginal social benefit curve and the area __________ represents the market failure.

Suppose a particular production process results in a large amount of pollution and the government decides to impose a tax to correct for this externality,such that the socially optimal output will be produced.The tax will have the effect of shifting the

A positive externality exists and government wants to apply a per-unit subsidy in order to bring about the socially optimal output.Under what condition will the solution (of the subsidy)be worse than the problem (the market failure)?

Exhibit 31-1 -Refer to Exhibit 31-l.If the exhibit represents a negative externality situation,the benefit of expanding output from Q₁ to Q₂ is the area of

The disagreement between A.C.Pigou and Ronald Coase arose because

In the case of a negative externality,the entire marginal social cost curve lies

Exhibit 31-4 -Refer to Exhibit 31-4. If a negative externality exists,then the market ____________output by the amount ________________.

When negative externalities are involved,the market is said to

In the early West,many of the open lands were overgrazed.This was largely because

Positive externalities can be internalized using persuasion,but persuasion is not effective with negative externalities.

When marginal private cost is equal to marginal social cost,