Exam 13: The Environment, Health, and Safety

The figure below shows the marginal benefit of hiring a security guard at the airport (MB_A)_, the bank (MB_B) and City Hall (MB_C). The marginal cost of hiring a security guard is the same at all three places and is given by MC. If each place hires the socially optimal number of security guards, the marginal benefit of the last security guard hired at each place will be the:

Compared to taxing pollution, an advantage of auctioning pollution permits is that:

Under a first-dollar health insurance plan, the patient's marginal cost of treating a covered illness is:

The figure below shows Ava's demand curve for days in the hospital. The marginal cost of an additional day in the hospital is $200. Compared to when Ava has to pay the entire marginal cost of spending a day in the hospital, what is the loss in total economic surplus that would result from Ava having a first-dollar insurance plan?

The use of pollution permits by the government to reduce pollution is:

Suppose Matt and Gabe must both choose between two jobs, a safe job that pays $250 per week and a risky job that pays $300 per week. The value of safety to each is $75 per week. Having more income than the other is worth $75 per week to each, and having less income than the other means a $75-per-week reduction in satisfaction. Having the same income as the other means no change in satisfaction. The payoff matrix below summarizes this situation. If Gabe and Matt choose their jobs at the same time, then you can predict that in the equilibrium of this game:

When Dale visits the doctor, Dale does not pay for either the visit or any tests the doctor may order. From this we can infer that Dale must:

Suppose the figure below shows Annie's demand curve for physical therapy. The marginal cost of each visit to the physical therapist is $150. If Annie had first-dollar medical insurance, then she would choose to have _____ visits a year.

Many beaches have a lifeguard on duty during the summer but not during the winter. The most likely explanation for this is that:

Public schools require proof that a child has been immunized against several diseases before enrolling. Why?

If firms are providing the optimal level of workplace safety, then:

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process A B C D E (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 ton/day) (0 tons/day) Cost to Firm X(\ / day) \ 500 \ 514 \ 530 \ 555 \ 585 Cost to Firm Y ( \/ day) \ 400 \ 420 \ 445 \ 480 \ 520 Cost to Firm Z( \/ day) \ 300 \ 325 \ 360 \ 400 \ 550 Suppose the government requires each firm to reduce pollution to 2 tons of smoke per day, so that total daily smoke emission is 6 tons. The total cost to society of this policy will be ______ per day.

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Process A B D D (smoke/day) (10 tons/day) (8 tons/day) (6 tons/day) (4 tons/day) (2 tons/day) Cost to Acme ( \/ day) \ 750 \ 800 \ 1,000 \ 1,400 \ 2,000 Cost to FirmCo ( \/ day) \ 500 \ 750 \ 1,200 \ 2,200 \ 4,000 Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the firms will adopt process ______, and a total of ______ tons of smoke will be emitted each day.

If all firms were to pay the same premium per worker into the workers' compensation system, then firms with high injury rates would pay premiums that:

If fewer families purchase health insurance because of rising health insurance premiums, then health insurance premiums are likely to rise further due to:

The graph below illustrates the marginal cost, marginal private benefit, and marginal social benefit of being vaccinated against a contagious childhood disease. MB1 measures ______ and MB2 measures ______.

Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Suppose the tax policy is adopted. A firm will be willing to pay the tax if $250 is less than or equal to:

For a fixed percent reduction in pollution emissions to be economically efficient, it would have to be the case that:

To the patient, the marginal cost of medical care is zero under:

Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Because firms face increasing marginal costs to reduce pollution, the demand curve for pollution permits will be: