Exam 5: Externalities, Environmental Policy, and Public Goods

Worldwide annual carbon dioxide emissions increased from about 198 million metric tons in 1850 to ________ million metric tons in 2015.

Figure 5-16 Amit and Bree are the only two homeowners on an isolated private road. Both agree that installing street lights along the road would be beneficial and want to do so. Figure 5-16 shows their willingness to pay for different quantities of street lights, the market demand for street lights, and the marginal cost of installing the street lights. -Refer to Figure 5-16. What is the optimal quantity of street lights to install?

It is difficult for a private market to provide the economically efficient quantity of a public good because

What does the phrase "internalizing an external cost" mean?

Figure 5-3 -Refer to Figure 5-3. The efficient output level is

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding. How is this behavior dangerous to the public?

According to ________, in a market with an externality, private parties would voluntarily negotiate an efficient outcome without government intervention.

If you burn your trash in the backyard in spite of regulations against it, then you are

Which of the following criteria should be used to evaluate if government intervention in a market for the purpose of environmental protection is justified?

Some environmentalists have criticized tradable emission allowances on the grounds that they give permit holders a license to pollute. Furthermore, environmentalists argue that those who sell their permits receive a monetary benefit from their contribution to polluting the environment. Use economic reasoning to evaluate this criticism.

Figure 5-10 Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the marginal social benefits of chicken pox vaccinations exceed the marginal private benefit for any quantity of vaccinations as illustrated in Figure 5-10. -Refer to Figure 5-10. One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations. What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?

Which of the following is a source of market failure?

A product is considered to be rival if

When there is a positive externality in a free market, too much of the good is produced and consumed.

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good. All of the following will result from the tax except

What is a market failure?

"Free riding" is a characteristic of which type of good?

Which of the following displays these two characteristics: rivalry and nonexcludability?

Which of the following displays these two characteristics: nonrivalry and excludability?

A carbon tax which is designed to reduce pollution is an example of a