Exam 14: Externalities, Market Failure, and Public Choice

If the Environmental Protection Agency (EPA) directs an old lace factory to install an expensive water purification system to treat its wastes before they are discharged into theriver,

Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, buther other neighbor Sally hates the constant noise. Tammy's wind chimes

China's use of which of the following types of energy is causing high levels of carbon dioxide pollution?

Ronald Coase was a sociologist who drew attention to the inability of economics to explain family decisions, for example, family size.

Which of the following statements is not true?

The ideal pollution tax adds how much to private cost?

Social cost is

In the presence of positive externalities, the market will choose a price that is__________ and produce a quantity that is __________ than the socially optimal price and quantity.

To correct a market failure, society typically relies on

Market failure occurs when

Externalities are consequences visited upon those individuals residing outside decision processes

If smokers knew the information cigarette firms conceal about the negative externalities associated with cigarette smoking

The cost that society incurs in cleaning up pollution caused by a firm's production is the same as the __________ associated with that production.

Explain why a subsidy will not solve the problem of producing less than is socially optimal of a pure publicgood.

The creation of private property rights corrects negative externality problems in many cases because they

Does government intervention guarantee provision of the socially optimum quantity of a public good?Explain.

In the analysis of externalities and market failure, a third party is

When representatives vote on behalf of the people and make choices about the quantity ofpublic goods provided,

a. Imagine that the state of Georgia decides to reduce emissions from chemical plants by taxing the production of chemicals. Will this reduce chemical plant emissions in the state? Will your answer to this question depend on whether or not Alabama has a similar tax? b. Will this tax protect Georgians from the negative externalities associated with these emissions? Will your answer to this question depend on whether or not Alabama has a similar tax?

Producing where P = MC does not yield an optimal distribution of resources when externalities are present because