Exam 4: Part B: Market Failures: Public Goods and Externalities

Suppose that a large tree on Shawn's property is blocking Sam's view of the lake below.Shawn accepts Sam's offer to pay Shawn $100 for the right to cut down the tree.This situation describes:

If the price of a product increases:

The term "Efficiency losses" refers to:

Refer to the graph given below. The graph above shows the supply of and the demand for a public good.Which of the following statements is correct?

The following information is for a public good.P_a and P_b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it.These people are the only two members of society.The collective willingness of this society to pay for the 2^nd unit of this public good is:

Answer the question based on the following information.Way-Below Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism.The university is now considering several alternative levels of crime control.This table shows the expected annual costs and benefits of these alternatives.The marginal costs of additional levels of crime control are:

The following information is for four highway programs of increasing scope.All figures are in millions of dollars.The data indicate that:

Refer to the diagram.The area of producer surplus would be represented by triangular area:

Which of the following is correct?

The following information is for a public good.P_a and P_b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it.These people are the only two members of society.If this good were a private good instead of a public one, the total quantity demanded at a $3 market price would be:

The socially optimal amount of pollution moderation occurs where society's marginal:

The proposition that under some circumstances externalities can get resolved through private negotiation is known as:

Refer to the supply and demand graph for a public good.Point c on the graph shows where the:

Refer to the diagram.The area of consumer surplus would be represented by triangular area:

Answer the next question on the basis of the following information is for public good.P_a and P_b represent the prices that citizens (a) and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Q_c) of the public good.Q_s represents the quantity of the public good supplied by government at each of the collective prices.If only 1 unit of this public good is produced, then the marginal benefit is:

The creation of markets for pollution rights would provide:

The Coase Theorem states that:

Market failure

Answer the next question on the basis of the following information is for public good.P_a and P_b represent the prices that citizens (a) and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Q_c) of the public good.Q_s represents the quantity of the public good supplied by government at each of the collective prices.In equilibrium, the marginal benefit and cost of the public good will be:

The production of economically desirable public goods must be sponsored by government because: