Exam 5: Externalities, Environmental Policy, and Public Goods

Which of the following activities create a negative externality?

Economists Kenneth Chay and Michael Greenstone found that in the two years following the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to a decline in infant deaths. Although this and other studies provide compelling evidence of the link between pollution and infant health, it is not clear that reductions from the much lower levels of ambient pollution today would have the same effect. Which of the following reasons could explain this?

Should the level of pollution be reduced to zero and if not, then to what level?

The first economist to systematically analyze market failure was

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.What is the economically efficient output level?

A product is considered to be nonexcludable if

Goods can be classified on the basis of whether their consumption is

A major problem with using a tradable emission allowances system to control pollution is

Figure 5-13 Figure 5-13 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13. If the government wanted to bring about the efficient level of gasoline production by imposing a tax, the amount of the gasoline tax would be ________ per gallon.

Figure 5-7 -Refer to Figure 5-7. Which of the following statements is true?

Figure 5-3 -Refer to Figure 5-3. In the absence of any government intervention, the private market

When negative externalities exist, the competitive market supply curve does not include all of the costs borne by members of society.

A product is considered to be excludable if it is jointly owned by all members of a community.

Which of the following is an example of a quasi-public good?

Figure 5-13 Figure 5-13 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13. The market equilibrium price of gasoline is ________ per gallon.

If there are no externalities, a competitive market achieves economic efficiency. If there is a negative externality, economic efficiency will not be achieved because

The tragedy of the commons was avoided in the Middle Ages by

An externality is an example of a market failure.

Some policymakers have argued that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. If the government decided to impose a tax on soda, the government will cause

Policies that mandate the installation of specific pollution control devices are called