Exam 5: Externalities, Environmental Policy, and Public Goods

What is a Pigovian tax? What happens to deadweight loss when a Pigovian tax is implemented?

Figure 5-5 Figure 5-5 shows a market with an externality.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂. -Refer to Figure 5-5.Suppose the current market equilibrium output of Q₁ is not the economically efficient output because of an externality.The economically efficient output is Q₂.In that case, diagram shows

The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called

Which of the following displays rivalry and excludability in consumption?

If the United States and other developed nations pay the cost of reducing public emissions, developing nations such as China could benefit from the reduction while not contributing to it.In this sense, one can think of reducing carbon emissions as being like a

How does a public good differ from a quasi-public good? In your answer give an example of each type of good.

Which of the following is an example of a quasi-public good?

A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else.

A market demand curve reflects the

What is a market failure?

The European Union established a cap-and-trade system which was designed to

The efficient level of paper production will occur where the

Figure 5-16 Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 5-16 shows their willingness to pay for different quantities of street lights, the market demand for street lights, and the marginal cost of installing the street lights. -Refer to Figure 5-16.What is the optimal quantity of street lights to install?

Figure 5-6 Figure 5-6 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to the Article Summary above.Assuming the findings are correct and all else equal, higher increases in home values which result from close proximity to a Trader Joe's are an example of a ________ due to the location of the Trader Joe's.

State the Coase theorem.

A positive externality results when

An important difference between the demand for a private good and the demand for a public good is that

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The marginal benefit of the last unit produced is represented by the price

Figure 5-16 Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 5-16 shows their willingness to pay for different quantities of street lights, the market demand for street lights, and the marginal cost of installing the street lights. -Refer to Figure 5-16.How much is Bree willing to pay per street light to have 4 street lights installed?