Question 1

Figure 5-3 
-Refer to Figure 5-3. The deadweight loss due to the externality is represented by the area

Accepted Answer

A)  mso. 
B)  msn. 
C)  nso. 
D)  mtn.

Question 2

Consider the following characteristics: a. low transaction costs
B. small levels of pollution
C. high levels of pollution
D. clear assignment of property rights.
Which of the above are assumptions behind the Coase Theorem?

Accepted Answer

A)  a, b, and d 
B)  a, c, and d 
C)  a and d 
D)  a only

Question 3

A product is considered to be nonexcludable if

Accepted Answer

A)  you can keep those who did not pay for the item from enjoying its benefits. 
B)  you cannot keep those who did not pay for the item from enjoying its benefits. 
C)  your consumption of the product reduces the quantity available for others to consume. 
D)  it is jointly owned by all members of a community.

Question 4

If electric utilities continually reduce their emissions of sulfur dioxide,

Accepted Answer

A)  the utilities will eventually be forced to go out of business. 
B)  the marginal benefit of additional emissions will rise. 
C)  the marginal cost of further emissions will rise. 
D)  the total benefit of sulfur dioxide emissions will fall.

Question 5

A public good is

Accepted Answer

A)  a good that is rival and excludable. 
B)  good that is nonrival and nonexcludable. 
C)  a good that is nonrival and excludable. 
D)  a good that is rival and nonexcludable.

Question 6

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

Accepted Answer

A) True 
 B)False

Exam 5: Externalities, Environmental Policy, and Public Goods

Figure 5-3 -Refer to Figure 5-3. The deadweight loss due to the externality is represented by the area

Consider the following characteristics: a. low transaction costs B. small levels of pollution C. high levels of pollution D. clear assignment of property rights. Which of the above are assumptions behind the Coase Theorem?

A product is considered to be nonexcludable if

If electric utilities continually reduce their emissions of sulfur dioxide,

A public good is

A quasi-public good differs from a public good in that unlike a public good, it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.