Exam 18: Externalities, Open-Access, and Public Goods

A zero pollution level is NOT achievable because

Suppose that in the market for paper,demand is p = 100 - Q.The private marginal cost is MC^p = 10 + Q.Pollution generated during the production process creates external marginal harm equal to MC^e = Q.What specific tax would result in a competitive market producing the socially optimal quantity of paper?

-The above figure shows the market for steel ingots.At the social optimum level of output,the total welfare is

If children go to school and become productive members of society,

In terms of cost-benefit analysis,explain why a competitive market with an externality produces too much pollution.

Suppose that the market for steel is shown in the above figure.Is social welfare greater under monopoly or under competition?

In the presence of no externalities,

Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's Theorem,the optimal level of trash in the park can be achieved if

Which of the following goods is more likely to be excludable?

If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could

You are having a party and one of your guests lights up a cigar without asking.Explain why this creates an externality.

-The above figure shows the payoff matrix for two firms.A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake.A private beach on the lake must decide whether to operate or not.Increased pollution reduces the number of people who wish to visit the beach.If nobody owns the lake,then

The median voter votes yes for a project if

To maximize welfare in a competitive market that has a negative externality in production,government should tax a pollution-generating good at a specific tax equal to the marginal cost of producing the good.

The efficient quantity of a public good occurs when the marginal cost of providing that good equals the sum of the marginal benefits to all individuals.

Production of a good produces pollution that is very damaging with each additional unit.A monopoly facing a very elastic demand curve will most likely produce

-The above figure shows the market for steel ingots.An externality can be seen because

-The above figure shows the payoff matrix for two firms.A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake.A private beach on the lake must decide whether to operate or not.Increased pollution reduces the number of people who wish to visit the beach.Joint profits are maximized when

The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called

Your new neighbor does not mow his lawn or prune the trees in his front yard.As a result,your house value decreases.Your neighbor generated