Exam 9: Imperfect Information, External Benefits, and External Costs

Table 9.5 -Both firms depicted in Table 9.5 can benefit if Firm A sells its pollution permit allowing it to generate 1,000 gallons of wastewater to Firm B for

If two firms have different abatement costs, in a system of marketable pollution permits

Pollution taxes reduce pollution by

Recall the Application about how the price of pollution permits is determined to answer the following question(s). -Recall the Application. Which of the following factors is used in determining the demand for CO₂ allowances in the EU?

Insurance policies in which each firm pays a different price for medical insurance depending upon the past medical bills of the firm's employees are based upon a(n)

Recall the Application about space debris in the atmosphere to answer the following question(s). -Recall the Application. Which of the following is TRUE?

An example of a good that is nonexcludable is

A carbon tax placed on coal would

An external benefit is the benefit experienced by people who

Suppose buyers in the used car market are willing to pay $8,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 20% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?

Under a system of marketable pollution permits, a firm with relatively low abatement costs will buy permits from a firm with relatively high abatement costs.

The problems of thin markets can be addressed by

A distinguishing feature of a public good is that it

Command-and-control policies generally reduce pollution more than pollution taxes do.

A pollution tax internalizes the costs of pollution a firm is imposing on others.

If only a small percentage of used computers on the market are plums (high-quality), then the asymmetric information concerning the quality of used computers has generated a ________ market.