Exam 8: Externalities, the Environment, and Public Goods

A sandwich shop locates next door to a small engine repair shop. Soon, the sandwich shop owners complain that the noise from the engine repair shop is driving away their customers. The engine repair shop owners say that their shop was there first and that the sandwich shop owners should either move or get used to the noise. Utilizing the tenets of the Coase theorem, what are the possible outcomes?

(Figure: Common Resource Goods 2) In this figure, which point depicts social equilibrium?

When the private costs of production that are incurred by a business are different than the total cost to society, _____ failure has most likely occurred.

The time that Helen has spent tending to the landscaping around her house has resulted in a beautiful yard. Annie, who lives across the street, enjoys looking at the beautiful yard. What is Helen's marginal private benefit, and what is the marginal social benefit?

_____ are marginal benefits that are received by buyers of a good.

Which of the following is an example of a private good?

(Figure: Externalities and Social Equilibrium 2) In this figure, which point represents private equilibrium?

(Figure: Externalities and Social Equilibrium 2) In this figure, which point represents the equilibrium that is likely to occur absent government intervention?

Positive externalities result in _____ of a good.

_____ goods can be denied to individuals who do not pay.

A side effect of a transaction that affects someone who is not involved in the transaction is called:

Social equilibrium is where:

In economics, the _____ occurs when people receive benefits from a public good without paying.

Using the characteristics of rivalry and excludability, describe the four types of goods, and provide an example for each.

(Figure: Externalities I) In this figure, the distance between which two points represent the value of a negative externality?

A _____ occurs when someone who is not involved in a transaction benefits from it.

_____ benefits are marginal benefits excluding external benefits.

The Rainbow Paint Company is illegally dumping waste materials into a nearby river. How does this impact the company's full cost of production?

_____ goods are nonrival in consumption and nonexcludable.

An example of a positive externality is: