Exam 10: Externalities

The Coase theorem suggests that efficient solutions to externalities can be determined through bargaining.Under what circumstances will private bargaining fail to produce a solution?

Which of the following represents a way that a government can help the private market to internalize an externality?

In the case of a technology spillover,internalizing a positive externality through a government subsidy will cause the industry's supply curve to

Suppose that Charles wants to dine at a fancy restaurant,but the only available table is in the smoking section.Charles dislikes the smell of cigarette smoke.He notices that only one person,Sam,is smoking in the smoking section.Charles values the absence of smoke at $40.Sam values the ability to smoke in the restaurant at $15.Which of the following represents an efficient solution in the absence of transaction costs?

Which of the following statements is correct about a market in which pollution is emitted?

Which of the following is a way to address an externality problem?

To determine the optimal level of output in a market with negative externalities,a benevolent social planner would look for the level of output at which private cost equals private value.

If a market is characterized by a positive externality that is not the result of a technology spillover,

Max lives in an apartment building and gets a benefit from playing his stereo.Lily,who lives next door to Max and often loses sleep due to the loud music coming from Max's stereo,bears a cost from the noise.Lily is threatening to call the police to force Max to turn down his stereo.Under which of the following conditions would Max be able to offer Lily some amount of money to keep her from calling the police and to allow him to continue to play his stereo loudly?

To enhance the well-being of society,a social planner will encourage firms to increase production when

Figure 10-8 -Refer to Figure 10-8.What is the equilibrium price in this market?

Suppose that a negative externality is created by the production of good X.Which of the following statements is correct?

Assume that your roommate is very messy.Suppose she gets a $25 benefit from being messy but imposes a $50 cost on you.The Coase theorem would suggest that an efficient solution would be for you to

Figure 10-10 -Refer to Figure 10-10.The graph represents a market in which

Figure 10-9 -Refer to Figure 10-9,Panel (b).The market equilibrium price is

When the government intervenes in markets with externalities,it does so in order to

Figure 10-3 -Refer to Figure 10-3.At the private market outcome,the equilibrium price will be

Figure 10-13.On the graph,Q represents the quantity of plastics and P represents the price of plastics. -Refer to Figure 10-13.If 250 units of plastics are produced and consumed,then the

A positive externality occurs when

Which of the following is a problem that keeps people from privately solving externality problems?