Exam 15: Externalities, Environmental Policy and Public Goods

Parents who do not have their children immunised and attempt to benefit from other parents who did have their own children immunised are exhibiting an economic behaviour known as

An externality is

A tragedy of the commons occurs when a resource is

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

Figure 15-4 Suppose there are several paper mills producing paper for a market.These mills,located upstream from a fishing village,discharge a large amount of wastewater into the river.The waste material affects the number of fish in the river,and the use of the river for recreation and as a public water supply source.Figure 15-4 shows the paper market.Use this Figure to answer the following question(s). -Refer to Figure 15-4.What does S₂ represent?

The Coase theorem asserts that government intervention is a prerequisite for addressing externality problems.

Figure 15-14 Figure 15-14 shows the market for Atlantic salmon,a common resource.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂. -Refer to Figure 15-14.The current market equilibrium output is partly the result of overfishing.In that case,what does S₁ represent?

Figure 15-3 -Refer to Figure 15-3.The efficient output level is

Medical research that ends in a cure for a serious disease produces positive externalities.What is the impact of this positive externality on economic efficiency?

A product is considered to be rival if

Figure 15-2 Figure 15-2 shows a market with a negative externality. -Refer to Figure 15-2.The true marginal cost of the last unit produced is represented by the price

Figure 15-5 Figure 15-5 shows a market with an externality.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂. -Refer to Figure 15-5.If,because of an externality,the economically efficient output is Q₂ and not the current equilibrium output of Q₁,what does D₂ represent?

An external cost is created when you

If there is pollution in producing a product,then the market equilibrium price is too high and equilibrium quantity is too low.

Figure 15-2 Figure 15-2 shows a market with a negative externality. -Refer to Figure 15-2.The efficient output level is

Figure 15-3 -Refer to Figure 15-3.In the absence of any government intervention,the private market

The social cost of cutting trees for firewood in a government forest is

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

Figure 15-10 Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease.Thus,the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 15-10. -Refer to Figure 15-10.What is the value of the net gain to society as a result of subsidising chicken pox vaccinations?

When there is a negative externality,the competitive output is more than the economically efficient output level.