Exam 17: Externalities and Public Goods

When the market for product Y includes a positive externality,:

An environmental economic consulting firm is hired to measure the negative externalities associated with the pollution from an industry. The consultants calculate the marginal social cost of production to be $M S C = 2 Q + 30$ and the marginal private cost of production to be $M P C = Q$ $+ 30$ . The market demand curve can be expressed as $P = 60 - Q$ . The net social benefit at the market equilibrium (i.e. the equilibrium where production decisions do not take into account the externality) is:

Suppose that the marginal private benefit of a new vaccine could be measured as $M P B = 10 -$ $Q$ . Suppose that the marginal social benefit could be measured as $M S B = 12 - Q$ . Suppose that the private marginal cost curve could be measured as $M P C = Q$ . What quantity represents the optimal societal consumption of the vaccine?

The free rider problem occurs:

An environmental economic consulting firm is hired to measure the negative externalities associated with the pollution from an industry. The consultants calculate the marginal social cost of production to be MSC = 2Q+30 and the marginal private cost of production to be +30. The market demand curve for the industry can be expressed as P = 60-Q. If the industry currently does not take into account the negative externality in its supply decisions, the industry is ________________ by _____________ units relative to the social optimum.

________________ states that regardless of how property rights are assigned with an externality, the allocation of resources will be will be efficient when the parties can costlessly bargain with each other.

According to the Coase Theorem, in the absence of bargaining costs,:

A commonality between externalities and public goods is that:

In public goods markets, the efficient provision of the public good is determined by:

Suppose that Bill, George, and $\mathrm { Al }$ constitute the entire market for consumers of national defense. Each man has an identical demand curve for national defense, which can be expressed as $P =$ $50 - Q$ . Suppose that the marginal cost for national defense can be expressed as $M C = \$ 30$ . What is the optimal quantity of national defense?

In markets with externalities or public goods, the private costs and benefits that decision makers face are the same as the social costs and benefits.

To move closer to the social optimum when a negative externality exists, the cost to society of the externality should be:

Which of the following is a real-world example of a public good?

An example of a good that is non-rival but exclusive is:

A non-rival good:

Suppose that the government could accurately measure the marginal cost of an externality such as water pollution. In order to reduce production from a plant that emits water pollution, the government places an optimal emissions fee on the plant. The final amount of production equates demand with the marginal social cost to society. The deadweight loss associated with this fee is

Which of the following is a real-world example of a negative externality?

When the market for product X includes a negative externality,:

Suppose that the marginal private benefit of a new vaccine could be measured as $M P B = 10 -$ $Q$ . Suppose that the marginal social benefit could be measured as $M S B = 12 - Q$ . Suppose that the private marginal cost curve could be measured as $M P C = Q$ . What amount of a per-unit subsidy would encourage the optimal societal consumption of the vaccine?

Suppose that the marginal private benefit of a new vaccine could be measured as $M P B = 10 -$ $Q$ . Suppose that the marginal social benefit could be measured as $M S B = 12 - Q$ . Suppose that the private marginal cost curve could be measured as $M P C = Q$ . If there is no subsidy in this market,: