FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Externalities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

True/False

Review LaterAdd Note

Review Later

A corrective tax places a price on the right to pollute.

A) True
B) False

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

Patent protection is one way to deal with technology spillovers.

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Suppose that candy producers create a positive externality equal to $1 per pound of candy. Further suppose that the government offers a $1-per-pound subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of candy?

Figure 10-5 -Refer to Figure 10-5. Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is

Why are Pigovian taxes preferred to regulatory policies as methods to remedy negative externalities?

Table 10-1 ​ $\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Private Value } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { Private Cost } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { External Cost } \\\text { (Dollars) }\end{array} \\\hline 1 & 28 & 12 & 4 \\\hline 2 & 26 & 14 & 4 \\\hline 3 & 24 & 16 & 4 \\\hline 4 & 22 & 18 & 4 \\\hline 5 & 20 & 20 & 4 \\\hline 6 & 18 & 22 & 4 \\\hline 7 & 16 & 24 & 4 \\\hline\end{array}$ -Refer to Table 10-1. Which of the following statements is correct?

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following: a private cost of $2.83; a social cost of $3.12; a value to consumers of $3.23. -Refer to Scenario 10-1. From the given information, it is apparent that

Table 10-3 ​ ​ $\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Private Value } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { Private Cost } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { External Benefit } \\\text { (Dollars) }\end{array} \\\hline 1 & 22 & 12 & 10 \\\hline 2 & 20 & 15 & 10 \\\hline 3 & 18 & 18 & 10 \\\hline 4 & 16 & 21 & 10 \\\hline 5 & 14 & 24 & 10 \\\hline 6 & 12 & 27 & 10 \\\hline\end{array}$ -Refer to Table 10-3. The social value of the 4^th unit of output that is produced is

Figure 10-5 -Refer to Figure 10-5. The graph represents a market in which

In some cases, tradable pollution permits may be better than a corrective tax because

When an externality is present, the market equilibrium is

Some government policies provide incentives for private decision makers to choose to solve the problem of externalities on their own. What term do we use to describe such policies?

Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy.

Scenario 10-4 The demand curve for fire extinguishers slopes downward and the supply curve for fire extinguishers slopes upward. The production of the 500^th fire extinguisher entails the following: • a private cost of $10; • an external cost of $0; • a private value of $9; • an external benefit of $3. -Refer to Scenario 10-4. Is the market-equilibrium quantity of fire extinguishers less than, equal to, or greater than 500? Explain.

Figure 10-6 ​ -Refer to Figure 10-6. Each unit of plastics that is produced results in an external

Figure 10-8 ​ -Refer to Figure 10-8. This market would benefit from a tax equal to $50 per unit.

A technology spillover is a type of negative externality.

Figure 10-8 ​ -Refer to Figure 10-8. The socially optimal price and quantity are $250 and 250 units, respectively.

Suppose the socially-optimal quantity of good x is larger than the market-equilibrium quantity of good x. Does the production of good x convey a positive externality or does it convey a negative externality?

Bruce engages in an activity that diminishes the well-being of Shawna. Bruce pays no compensation to Shawna for her loss in well-being. What specific term do economists use to describe this situation?