Exam 5: Externalities, Environmental Policy, and Public Goods

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

For-profit producers will produce only private goods because

Which of the following exemplifies the tragedy of the commons?

Figure 5-4 Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure 5-4 shows the paper market. Use this Figure to answer the following question(s). -Refer to Figure 5-4. Why is there a deadweight loss?

The supply curve of a public good shows

The basic cause of deadweight losses from the existence of common resources and externalities is

A negative externality is an example of market failure. The root of the problem lies in the definition and enforcement of property rights. Explain.

In economics, the optimal level of pollution is

A public good is

The marginal private cost of a good or service is the cost borne by the producer.

Define the tragedy of the commons. Give three examples of common resources. Briefly explain why common property resources are subject to overuse.

Because producers do not bear the external cost of pollution

Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain then, according to the Coase theorem

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep those who do not pay for the quasi-public good from enjoying the benefits of the good.

Alternative approaches for reducing carbon dioxide emissions are

Figure 5-3 -Refer to Figure 5-3. The size of marginal external benefits can be determined by

What is a private cost of production? What is a social cost of production? When is the private cost of production equal to the social cost of production?

The marginal social cost of a good or service is the cost borne by the producer.

A market supply curve reflects the

Figure 5-6 Figure 5-6 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 5-6. What is the market equilibrium output level?