Exam 5: Externalities, Environmental Policy, and Public Goods

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

An external cost is created when you

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. What is the value of the net gain to society as a result of subsidizing chicken pox vaccinations?

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 does S₂ represent?

Figure 5-6 Figure 5-6 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to the Article Summary. Assuming the findings are correct and all else equal, higher increases in home values which result from close proximity to a Whole Foods or Trader Joe's are an example of a ________ due to the location of these stores.

Conceptually, the efficient level of carbon emissions is the level for which

Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because

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. How much is Bree willing to pay per street light to have 4 street lights installed?

What are some of the limitations of the Coase theorem in practice?

Haiti was once a heavily forested country. Today, 80 percent of Haiti's public forests have been cut down, primarily to be burned to create charcoal. The reduction in the number of trees has lead to devastating floods when it rains heavily. This is an example of

How does a negative externality in production reduce economic efficiency?

How does a positive externality in consumption reduce economic efficiency?

All of the following are examples of public goods except

Which of the following displays rivalry and excludability in consumption?

Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service. The value of the service to each of them is $50 and it costs $80 to hire a housecleaner. Should they hire a housecleaner?

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2. The marginal benefit of the last unit produced is represented by the price

Which of the following would result in a positive externality?

Suppose the government mandates the installation of a certain type of pollution abatement equipment for the leather tannery industry. For some firms in the industry, installing this equipment may not be the most cost effective method of reducing pollution.

The efficient level of paper production will occur where the

A negative externality exists if