Exam 20: Public Goods and Externalities

Which of the following statements is true?

Reducing automobile pollution beyond a certain point is not efficient when:

Use the following figure to answer the question : Figure 20-1 : D₁ and S₁ are the private demand and supply curves,of a commodity produced by a competitive firm.S₂ reflects the social marginal cost of production,while S₀ represents the external marginal cost. -From Figure 20-1,we can infer that the efficient output is:

A swimming club charges membership fees to all the members.This implies that a pool at this club would be characterized by:

What would happen if the government tries to internalize an externality,generated from the production of a commodity,through taxation?

When a producer does not internalize the negative externality associated with the production of a good,then:

Jack benefits from keeping four dogs whose barking bothers his neighbor Jane.If Jane has the legal right to a quiet neighborhood,and mutual bargaining is expensive,which of the following will hold true?

A _____ gives the inventor the right to make a new product or use a new process typically for 17 years.

If the production of a certain commodity generates external benefits for those who do not participate directly in the production process,then:

Suppose a competitive industry generates some sort of pollution while producing its output.In order to internalize the externality,the government may:

A uniform per-unit tax on pollution achieves abatement in the least costly manner because:

Use the following figure to answer the question : Figure 20-2 : shows the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits. -In Figure 20-2,the efficient output is:

An uncongested,toll road is characterized by:

Assume that the current price of a marketable permit to emit one ton of sulfur dioxide is $60.For firm A,the marginal cost of reducing one ton of sulfur dioxide is $50.For firm B,the marginal cost of reducing one ton of sulfur dioxide is $70.Under a tradable-permit scheme:

Use the following figure to answer the question : Figure 20-2 : shows the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits. -In Figure 20-2,the efficient output is _____ than the market equilibrium output by _____ units.

The Red List of Threatened Species,compiled by the World Conservation Union,gives details of 11,167 species of animals and plants that are known to be at risk of extinction.Among the 10 animals that are of most concern,because of their commercial value,is the hawksbill sea turtle,which is threatened because of the demand for its beautiful shell.The species is the sole source of "tortoiseshell" used to make curios and jewelry.Which of the following most closely explains/supports the information given above?

Suppose there are steel manufacturing firms (firm A and firm B.in a city which release 20 units and 16 units of pollutants every year in the absence of any restriction.The government then issues tradable permits to pollute to each of the firms.The overall emission level allowed through the permits was set at 6 units for each firm.Explain with the help of a suitable figure that how the government achieves a target of reducing pollution by 24 units in the least costly way.

Suppose an electric utility company expects to earn $1 million in profit each year.In the process of producing electricity,pollutants emitted by the firm's smokestacks impose costs of $50 per year on each of 10,000 neighboring residents.A smokestack scrubber that would eliminate 80% of the damage can be purchased for $200,000,but needs to be replaced each year. a)Should the utility remain in business? Explain. b)What is the least costly method of achieving an efficient outcome with respect to pollution? c)If the right to the air (to remain clean)is assigned to the adjacent homeowners,what obstacles are likely to deter an efficient solution? d)If the right to the air (to pollute it)is assigned to the utility company,what obstacles are likely to deter an efficient solution? Be specific.

Use the following figure to answer the question : Figure 20-1 : D₁ and S₁ are the private demand and supply curves,of a commodity produced by a competitive firm.S₂ reflects the social marginal cost of production,while S₀ represents the external marginal cost. -Refer to Figure 20-1.When the efficient output is being produced,the price of the good must be:

When an economic activity generates a benefit for those who are not directly involved in it a(n)_____ is said to exist.