Exam 30: Market Failure Externalities Public Goods and Asymmetric Information

Under a tradable pollution permits system (cap and trade), government _____________ the amount of pollution, ___________________ what the price to pollute will be.

Exhibit 30-2 ​ -Refer to Exhibit 30-2. If the exhibit represents a positive externality situation, the private cost of expanding output from Q₁ to Q₂ is the area of

Exhibit 30-1 ​ -Refer to Exhibit 30-1. This graph represents a negative externality situation. Given this, which of the two curves, X or Y, represents marginal social costs and why?

Exhibit 30-5 ​ -Refer to Exhibit 30-5. If a positive externality exists, then curve 1 represents the __________, curve 2 represents the __________, curve 3 represents the __________ and Q₁ represents the __________.

One consequence of a negative externality is that

Maria lives next door to Alice. Alice regularly plays loud music, which often disturbs Maria. Maria went over to Alice's house yesterday and asked her to turn down her music because loud music adversely affects her. Alice has complied. Which of the following best describes the economists' view of what has happened?

Generally, positive externalities result in

If a person who generates a negative externality incorporates into his or her private cost-benefit calculations the effects that this externality will have on third parties, the externality has been

All economists agree that to justify that market failure has occurred, it is sufficient to have the market choose an inferior product over a superior product.

There is an average price for a used car that accounts for both good used cars and bad used cars ("lemons"). At the current market price for used cars, the persons __________ likely to offer their used cars for sale are people who own __________.

Suppose a person with automobile collision insurance is more likely to try to drive on an icy road in the middle of winter than that person would be if he or she didn't have automobile collision. This is an example of

Damian is texting while driving and ends up slamming into the back end of the car in front of him, which then strikes the car in front of it. By texting while driving, Damian has created a

A side effect of an action that adversely affects the well-being of others is called a

Exhibit 30-3 -Refer to Exhibit 30-3. Suppose that Firms A, B, and C are the only polluters in the state and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution the government imposes an emission tax of $300 per ton of pollution. As a result of this tax, Firm A would _________________, firm B would ____________________ and firm C would __________________.

Which of the following statements is true?

Which of the following is definitely not a nonexcludable public good?

Some racing horse breeders keep a few of their foals and sell the others. Generally, they put the poorest quality foals up for sale early in the season. Buyers have limited information about the foals up for sale, but they know that the first foals from some breeders will not be good racers. Other breeders sell all their foals. Since buyers cannot know which breeders are keeping back their good foals, they are suspicious of all foals offered for sale early in the season, lowering the sale prices. Breeders who sell all their foals are therefore forced to hold back their better foals until later in the season, to get true market prices for them. The market for foals is therefore subject to the

The excludability versus nonexcludability issue is

When students arrive late to class and disrupt their classmates

Exhibit 30-1 ​ -Refer to Exhibit 30-1. If the exhibit represents a negative externality situation, the net social cost of expanding output from Q₂ to Q₁ is the area of