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

Consider a housing development built near an existing airport.After the houses are occupied,homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited.Is the airport a negative externality?

A tax on a previously untaxed monopoly-produced good will necessarily lower total welfare if

In a market with positive externalities,

The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop.This is an example of

The price of pie increases.Some people who purchased pie before the price increase no longer purchase pie.This is

-The above figure shows the market for steel ingots.If the market is competitive,then the private producer surplus is

In the presence of a negative externality in production,a monopoly will produce

If a product provides a positive externality,a duopoly

If the social marginal cost of a good is very high relative to the private marginal cost,then a monopoly will most likely

Which of the following goods has the property of rivalry?

The total demand for a public good is found by

What is one reason drunk driving is held in such disrepute?

In a competitive market,a negative externality creates a deadweight loss because

-The above figure shows the marginal benefit from pollution for two firms.If each firm receives a marketable permit to produce 25 units of pollution,which one of the following is most likely to happen?

-The above figure shows the marginal benefit from pollution for two firms.If both firms receive a marketable permit to pollute 25 units of pollution each,how much will each firm pollute and how much will a permit for one unit of pollution be worth?

If both a monopoly and a competitive market with the same marginal cost would produce a quantity that is greater than the social optimum in a market because of externalities,then

Because a monopoly will produce less of a good than a competitive market will,welfare is always greater under monopoly than under competition in the presence of a negative externality.

In general,an externality is created when

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?

Explain why the optimal amount of pollution is often not zero.