Exam 5: Externalities- Problems and Solutions

When the social marginal benefit curve of reduction of pollution is locally flat and the costs of reduction are uncertain,which of the following generally makes sense?

Suppose your neighbor enjoys letting the grass in his yard grow wild and free,a practice with which you disagree.This is an example of a:

In a free market in which there is pollution,the optimal amount of pollution reduction occurs when:

Suppose a company that produces chemicals disposes of PCBs (a cancer-causing toxin)in the local lake.The private costs of production are incurred by __________; the social costs of production are incurred by ____________.

For a tax to lead to the optimal amount of pollution,it should be set:

Taxing the producer of an externality based on the amount of the externality produced is equivalent to which of the following?

A subsidy on the production of education to change its equilibrium price and quantity would:

Complete the following sentence so that it ALWAYS holds true: In the presence of a positive production externality,________ is produced relative to the optimal level.

To maximize social welfare when there are no externalities,marginal private costs must be:

Suppose your town wishes to build a dam to protect itself from the risk of flooding.Despite the fact that each family in the town is willing and able to pay up to $200 to have the dam built and it will cost only $150 per family,a voluntary contribution campaign is unable to raise enough funds to build the dam.Why? What type of problem is this,and what solution would you recommend?

If you wish to assign property rights so that a previously existing externality is now fully accounted for in a market transaction,you have to solve:

Which of the following is defined as the private marginal benefit to the consumers plus any costs associated with the consumption of the good that are imposed on others but for which those others are not fully compensated?

According to part II of the Coase theorem,to achieve the efficient solution to an externality:

Suppose that a market is in equilibrium and that there is no government intervention in the market.If the private marginal cost of producing an item is $4 and the social marginal cost of production is $6,what is the private marginal benefit of the item?

An implication of part I of the Coase theorem is that in the presence of externalities,government:

_____ arise whenever the actions of one party make another party worse or better off,yet the first party neither bears the cost nor receives the benefits of doing so.

In 1997,representatives from 170 nations met in Kyoto,Japan,to discuss global warming,which is caused by the:

To maximize total welfare,one must equate ________ with ________.

Suppose your roommate smokes in your apartment,imposing a cost on you.The Coase theorem suggests that one solution would involve:

A government payment to an individual or firm that lowers the cost of consumption or production,respectively,is referred to as which of the following?