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

The Commons Problem arises because

The Commons Problem could be addressed by

When majority rule voting is used to determine whether to purchase a public good,

Assume a country agrees to a free-trade act with another country.In the process,some individuals are displaced from their jobs,thus the free-trade act results in a negative externality.

If the median voter voted against a project,we can infer that

-The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output,and the marginal cost to the surrounding neighbors.The marginal cost of production is zero for the firm.If the firm owns the river and there are thousands of surrounding neighbors,how much pollution is likely to occur?

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 is the competitive market level of output?

Changing the price of a good will usually result in a negative externality.

In the presence of a negative externality generated by producing a good,a competitive market will produce more of that good than is socially optimal.

A commodity or service whose consumption by one person does not preclude others from also consuming it is called a

A monopoly might produce less than the socially optimal amount of pollution because

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.

Which of the following is NOT a common property?

Which of the following is NOT a club good?

A specific tax in a monopoly market equal to the marginal harm of pollution

When negative externalities from production exist,the deadweight loss from a competitive market may be larger than with a monopoly.

Negative externalities are created when

-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 the chemical firm owns the lake,and the beach owner must pay $10 to keep the chemical firm at just one ton of pollution,then

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

-The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output,and the marginal cost to the surrounding neighbors.The marginal cost of production is zero for the firm.According to Coase's Theorem,which of the following scenarios is most likely to lead to the socially optimal level of pollution?