Exam 10: Externalities and Public Goods

Suppose that the production of sunflowers generates a positive externality in that travelers enjoy the scenic beauty of sunflower fields. An appropriate government policy yielding the socially optimum outcome in this case might be:

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good.

Emissions from large pulp and paper factories create health risks for pedestrians and discomfort for residents of the city of Ashdown, Arkansas. In this case:

Municipal law enforcement and iTunes downloads are similar in that both are _____, but they differ in that municipal law enforcement is _____, while iTunes downloads are _____.

What type of good is nonrival and nonexcludable?

A government uses taxes to build and maintain a museum, and citizens can visit the museum without paying an admission fee. Which of the following considerations implies that visiting a museum is NOT a public good?

A good is _____ when it is difficult to prevent someone from using or having access to it.

An externality is NOT:

The government has adopted an emissions tax if it:

Beatrice loves to work in her magnolia garden, which provides pleasure to everyone in her neighborhood. To improve social welfare, the government could _____ Beatrice's gardening activities, since the market quantity of magnolias is _____ than the socially optimal quantity.

The Rational Rule for Society says that more of a good should be produced:

If a product that generates a negative externality is priced so that the polluters bear the cost of the externality, the price of the product will likely:

Suppose the government sets the total level of pollutants that can be discharged by city industries and that cities buy and sell the rights to pollute at levels below the cap. This illustrates:

(Figure: Market 2) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the shower gel market. In this market, the socially optimal output is _____, and the market-determined output is _____.

(Figure: MSC and Supply Curves) Use the graph to answer the question. The graph shows the marginal social cost curve and supply curve for Jed's company. What is Jed's marginal private cost when he produces eight units?

(Figure: Market) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. If market forces prevail, this market will produce and sell _____ units of output at a price of _____.

If motorcycle riders decide to send text messages without considering the costs imposed on others, the:

The tragedy of the commons is the:

(Figure: A Competitive Market in the Presence of Externalities) Use Figure: A Competitive Market in the Presence of Externalities. Given the figure, if there are external benefits:

The marginal private benefit curve is also the: