Exam 14: Externalities, Market Failure, and Public Choice

In the case where cigarette firms conceal information about the negative externalities associated with cigarette smoking, the market is said to be characterized by

Suppose that a hog-producing firm has been dumping its wastes into the local river. The government taxes the sale of hogs to pay for the cost of the river cleanup. As a result

Market failure implies that

-The country of Micromania has been concerned with providing the economically efficient level of national defense for its citizens. Micromania has three groups of residents and their defense demands are as depicted in Exhibit N-2. What is the value ofthe 33rd unit of national defense?

A clear property right to ownership of air would reduce the problem of air pollution.

Most economists believe that there are positive externalities associated with education. If they're right, the market for education fails to provide an efficient or socially optimal allocation of resources because the equilibrium

Producing the socially optimal (efficient) quantity of goods in an economy is consistent with

Public choice economics is the study of how elected officials are placed in their official capacities.

A common complaint about environmental law and enforcement is that it

Privatizing a public park would most likely do all of the following except

The existence of a positive externality demonstrates that

Markets often generate negative externalities because

Relying on majority rule of voting will yield a social optimum of all products.

a.What is the difference between a pure public good and a near-public good? b. Are streets pure public goods or near-public goods?

Which of the following would be a private cost of smoking to a cigarette smoker?

The level of protection from influenza (flu) in a community has characteristics of a public good.

To reach the socially optimal allocation of resources, the amount of government revenue received from a pollution tax should be

-In Exhibit N-1, which panel best depicts the situation that justifies partial public(taxpayer) support of the cost of providing for the education of private citizens (where S and D represent the initial private market outcome)?

Believers in public choice see government bureaucrats choosing the level of public goods based on their desire to keep their jobs.

Current discussions about the financing of congressional campaigns and presidential elections focus on the problem of