Exam 17: Externalities

-The table above gives the marginal social cost (which equals the price), marginal private benefit, and marginal social benefit of students attending Diablo Valley College (DVC) in Concord, California. a) When 4,500 students attend DVC, what does the marginal external benefit equal? b) If the market is competitive and left without government intervention, what is the quantity of students that will attend DVC and what will be the price of a course? c) What is the efficient quantity of students attending DVC? d) If the government can set the price per course, in order to have the efficient quantity of students attending DVC, what should the government set as the price?

Free

(Essay)

4.7/5

(45)

Question 1

Correct Answer:

Verified

a) The marginal external benefit equals $40, the difference between the marginal social benefit ($60) and the marginal private benefit ($20).
b) 3,500 students will attend and the price of a course will be $60.
c) The efficient quantity is 4,000 students because at this quantity the marginal social benefit equals the marginal social cost.
d) In order to have 4,000 students attend DVC, the government must set the price at $40 per course.

In an unregulated competitive market, the presence of marginal external benefit from a good or service results in less than the efficient quantity being produced.

Free

(True/False)

4.8/5

(32)

Question 2

Correct Answer:

Verified

True

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

Free

(Essay)

4.9/5

(36)

Question 3

Correct Answer:

Verified

Buyers ignore the presence of an external benefit because the benefit they receive is the private benefit. As a result, buyers do not take account of all the benefits from a good or service. Because buyers do not take account of all the benefits, their demand for the good or service, which reflects their private benefit, is less than the marginal social benefit, is less than the marginal social benefit. So, with the demand being less than the marginal social benefit, the equilibrium quantity is less than the efficient quantity.

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the government subsidizes education, how much should the subsidy be in order to attain the efficient level of enrollment?

(Multiple Choice)

4.8/5

(32)

Question 4

Which of the following is TRUE?

(Multiple Choice)

4.9/5

(35)

Question 5

A copper ore refiner pollutes the water upstream from a brewery. These are the only two parties involved. The transactions costs of reaching an agreement between the refinery and the brewery are low. The amount of water pollution will be at the efficient level

(Multiple Choice)

4.9/5

(31)

Question 6

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, the efficient level of output could be achieved by setting a per ton tax of

(Multiple Choice)

4.7/5

(33)

Question 7

A private subsidy has what effect on the amount of a good or service produced? Is a private subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

(Essay)

4.7/5

(36)

Question 8

Consider a market in which there is an external benefit. A private subsidy paid to producers can be used to arrive at the efficient market equilibrium because the subsidy will

(Multiple Choice)

4.9/5

(34)

Question 9

Both firm A and firm B emit 300 tons of pollution. Suppose both firm A and firm B have permits that allow each to emit 100 tons of pollution. If it costs $5,000 for firm A to eliminate 100 tons of pollution and it costs firm B $6,000 to eliminate 100 tons of pollution, then

(Multiple Choice)

4.8/5

(26)

Question 10

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

(Multiple Choice)

4.8/5

(35)

Question 11

-In the figure above, if the market is unregulated, the price will be

(Multiple Choice)

4.8/5

(42)

Question 12

Resources are efficiently utilized when production is such that marginal social benefit

(Multiple Choice)

4.8/5

(34)

Question 13

Education in the United States is heavily subsidized by the government. This fact suggest that I. less than the efficient amount of education would be provided by an unregulated market. II) the marginal social benefit of education is greater than marginal social cost of education.

(Multiple Choice)

5.0/5

(38)

Question 14

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. Based on the data in the table, production of fertilizer has

(Multiple Choice)

4.8/5

(36)

Question 15

Discuss the difference between a private cost and a social cost.

(Essay)

4.8/5

(31)

Question 16

Why would the amount of education provided be inefficient if subsidies to education were not provided?

(Essay)

4.9/5

(32)

Question 17

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the government undertakes public provision of the efficient amount of education, how much will the government charge for tuition?

(Multiple Choice)

4.9/5

(37)

Question 18

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government provides a voucher per student equal to the marginal external benefit of college education, then million students will attend college, and colleges will collect per student from the voucher.

(Multiple Choice)

4.8/5

(37)

Question 19

-The efficient level of college enrollment in Inland is

(Multiple Choice)

4.7/5

(40)

Question 20

Showing 1 - 20 of 437

In an unregulated competitive market, the presence of marginal external benefit from a good or service results in less than the efficient quantity being produced.

Why does the existence of an external benefit lead to the production of less than the efficient quantity?

Which of the following is TRUE?

A copper ore refiner pollutes the water upstream from a brewery. These are the only two parties involved. The transactions costs of reaching an agreement between the refinery and the brewery are low. The amount of water pollution will be at the efficient level

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, the efficient level of output could be achieved by setting a per ton tax of

A private subsidy has what effect on the amount of a good or service produced? Is a private subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

Consider a market in which there is an external benefit. A private subsidy paid to producers can be used to arrive at the efficient market equilibrium because the subsidy will

Both firm A and firm B emit 300 tons of pollution. Suppose both firm A and firm B have permits that allow each to emit 100 tons of pollution. If it costs $5,000 for firm A to eliminate 100 tons of pollution and it costs firm B $6,000 to eliminate 100 tons of pollution, then

-The tables above show the marginal costs and benefits from production of paper. If the efficient level of output is achieved by imposing a tax on paper producers, the government collects tax revenue equal to

-In the figure above, if the market is unregulated, the price will be

Resources are efficiently utilized when production is such that marginal social benefit

Education in the United States is heavily subsidized by the government. This fact suggest that I. less than the efficient amount of education would be provided by an unregulated market. II) the marginal social benefit of education is greater than marginal social cost of education.

-The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. Based on the data in the table, production of fertilizer has

Discuss the difference between a private cost and a social cost.

Why would the amount of education provided be inefficient if subsidies to education were not provided?

-The efficient level of college enrollment in Inland is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters