Exam 19: Externalities and the Environment

Exhibit 17-7 -Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars,what would be the social gain?

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

It is in the long-run economic interest of the world to preserve rainforests,but it is not in the short-run economic interest of the inhabitants of the countries involved to do so.

The United States recycles a greater portion of its garbage than Japan does.

Exhibit 17-5 -In Exhibit 17-5,if the government does not charge firms for emitting pollutants into a river,

Exhibit 17-1 -In Exhibit 17-1,the amount by which the total social cost of producing the private equilibrium level of output exceeds the total social benefit is

Free markets produce too little output when

All of the following are examples of negative externalities except one.Which is the exception?

Air pollution is more dangerous to the public,but toxic waste generates more public uproar.Why?

When using the traditional command-and-control approach to environmental regulation,the government attempts to

Exhibit 17-6 -In Exhibit 17-6,a subsidy of $3 per unit will lead to the socially optimal level of production.

The marginal social benefit of air quality

The most likely reason why Los Angeles has so much smog is that residents

Exhibit 17-4 -Which of the following could not have caused the increase in demand indicated in Exhibit 17-4?

A person can cause a negative externality by

According to Coase,

When the benefits to society of using a product exceed benefits to the user,

Exhibit 17-5 -In Exhibit 17-5,if the government sells the right to pollute a river,

When consumption of a good creates positive externalities,

As more pollution is abated,the total social benefit from pollution abatement increases.