Exam 16: Externalities and Public Goods

Suppose residents of Toadhop live on the Quabache River,a river prone to flooding.Suppose there are 1000 (type A)people who value flood control more than the 1000 (type B)people. where Q measures the quality of flood control.If the price of a unit of flood control is $100,000 and the citizens of Toadhop did not work together the amount of flood control purchased would be

Suppose the market for oranges is perfectly competitive and unregulated.Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges.Suppose Q_D = 1000 - 100P and Q_S = -100 + 100P.The price consumers would have to pay for the market to achieve the socially optimal level of production is

Left to their own,private markets tend to

In the case of a negative externality,the social marginal cost will

A higher interest rate (r)will favor those projects in cost-benefit analysis which

Perfectly competitive markets will tend to underallocate resources to nonexclusive public goods because

Each of the following provides incentives to reduce a negative externality except:

In the case of a positive externality,social marginal cost will

Bargaining costs are generally high in cases involving environmental externalities because

Suppose residents of Toadhop live on the Quabache River,a river prone to flooding.Suppose there are 1000 (type A)people who value flood control more than the 1000 (type B)people. where Q measures the quality of flood control.If the price of a unit of flood control is $100,000 and the citizens of Toadhop gather for a town hall meeting to find the socially optimal level of flood control,and they are successful,how much will each type B individual contribute in total?

Suppose residents of Toadhop live on the Quabache River,a river prone to flooding.Suppose there are 1000 (type A)people who value flood control more than the 1000 (type B)people. where Q measures the quality of flood control.If the price of a unit of flood control is $100,000 and the citizens of Toadhop gather for a town hall meeting to find the socially optimal level of flood control,and they are successful,they will pick Q equal to

Special interest groups often

Externalities between two firms can be "internalized" if: I.The two firms merge. II.Bargaining costs are zero. III.The externalities affect each firm equally. IV.Marginal costs for both firms are constant. Which statement(s)correctly complete(s)the sentence?

If preferences are one-dimensional and preferences are single peaked,majority rule will result in selection of the project most favored by

If bargaining is costless,the assignment of property rights for an externality

Each of the following is by definition an attribute of a public good except