Question 1

Figure 5-15 1 is not the economically efficient output. The economically efficient output is Q2. -Refer to Figure 5-15. The current market equilibrium output is partly the result of overfishing. In that case, what does S2 represent? A)  the private marginal benefit of harvesting salmon B)  the social marginal benefit of harvesting salmon C)  the private marginal cost of harvesting salmon D)  the social marginal cost of harvesting salmon" class="answers-bank-image d-inline" rel="preload" > Figure 5-15 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 5-15. The current market equilibrium output is partly the result of overfishing. In that case, what does S2 represent?

Accepted Answer

A)   the private marginal benefit of harvesting salmon
B)   the social marginal benefit of harvesting salmon
C)   the private marginal cost of harvesting salmon
D)   the social marginal cost of harvesting salmonE) A) and D)
F) B) and D)

Question 2

When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts down by the amount of the tax.

Accepted Answer

A) True 
 B)False

Question 3

A public good is a good that is both rival and excludable.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   At the market equilibrium, less than the economically efficient quantity of medical research is produced.
B)   A deadweight loss occurs because at the market equilibrium the marginal social cost of medical research is greater than the marginal social benefit.
C)   At the market equilibrium, more than the economically efficient quantity of medical research is produced.
D)   A deadweight loss occurs because at the market equilibrium the marginal social cost equals the marginal social benefit.E) A) and B)
F) A) and C)

Question 5

Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity?

Accepted Answer

A)   The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost.
B)   A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers.
C)   The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced.
D)   The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus.E) A) and D)
F) A) and C)

Question 6

Figure 5-13  Figure 5-13 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production.
-Refer to Figure 5-13. The efficient equilibrium quantity of gasoline is ________ million gallons per month.

Accepted Answer

A)   20
B)   32
C)   48
D)   56E) None of the above
F) A) and D)

Question 7

Figure 5-4 1 represent? A)  the market supply curve that reflects social cost B)  the market supply curve that reflects only external cost C)  the market supply curve that reflects only private benefit D)  the market supply curve that reflects private cost" class="answers-bank-image d-inline" rel="preload" > 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 5-4 shows the paper market. Use this Figure to answer the following question(s) .
-Refer to Figure 5-4. What does S1 represent?

Accepted Answer

A)   the market supply curve that reflects social cost
B)   the market supply curve that reflects only external cost
C)   the market supply curve that reflects only private benefit
D)   the market supply curve that reflects private costE) C) and D)
F) B) and D)

Question 8

If there is pollution in producing a product, then the market equilibrium price

Accepted Answer

A)   is too high and equilibrium quantity is too low.
B)   and equilibrium quantity are too low.
C)   and equilibrium quantity are too high.
D)   is too low and equilibrium quantity is too high.E) None of the above
F) A) and B)

Question 9

Government-imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

Accepted Answer

A)   the Pigovian method of pollution control.
B)   a command-and-control approach to pollution reduction.
C)   a Coasian solution to pollution reduction.
D)   a tradable emission allowance system of pollution control.E) None of the above
F) C) and D)

Question 10

Kenneth Chay and Michael Greenstone examined the impact of reductions in air pollution since the passage of the Clean Air Act of 1970. Which of the following statements summarizes their findings?

Accepted Answer

A)   The marginal benefit of reductions in air pollution was less than the marginal cost.
B)   The marginal cost of reducing emissions of sulfur dioxide has increased over time as the marginal benefit of the reductions has increased.
C)   The benefits of reducing the six main air pollutants in the two years following the Act greatly exceeded the costs.
D)   In the two years following passage of the Act, fewer infants died than would have died if the Act had not been passed.E) All of the above
F) A) and B)

Question 11

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?

Accepted Answer

Private benefit from consumption is the ...

Question 12

Figure 5-9 1. B)  Q2. C)  Q3. D)  Q4." class="answers-bank-image d-inline" rel="preload" > Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market.
-Refer to Figure 5-9. The efficient output is

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q4.E) All of the above
F) C) and D)

Question 13

Overuse of a common resource may be avoided by all of the following methods except

Accepted Answer

A)   charging for the use of a common resource.
B)   issuing tradable permits for the use of a common resource.
C)   government taking over ownership of all private common resources.
D)   setting quotas or legal limits on the quantity of the common resource consumed.E) All of the above
F) C) and D)

Question 14

Figure 5-5 1 is not the economically efficient output. The economically efficient output is Q2. -Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D1 represent? A)  the demand curve reflecting external benefits B)  the demand curve reflecting social benefits C)  the demand curve reflecting private benefits D)  the demand curve reflecting the sum of private and social benefits" class="answers-bank-image d-inline" rel="preload" > Figure 5-5 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 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D1 represent?

Accepted Answer

A)   the demand curve reflecting external benefits
B)   the demand curve reflecting social benefits
C)   the demand curve reflecting private benefits
D)   the demand curve reflecting the sum of private and social benefitsE) A) and C)
F) B) and C)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Common resources differ from public goods in that

Accepted Answer

A)   common resources are non-excludable while public goods are excludable to those who do not pay for the good.
B)   unlike public goods, common resources are rival in consumption.
C)   common resources are collectively owned by a group of people while public goods are government owned.
D)   common resources are resources that cannot be renewed but the production of public goods can be increased any time.E) A) and B)
F) B) and C)

Question 17

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Accepted Answer

A) True 
 B)False

Question 18

In the city of Alvarez, with the exception of guide dogs for blind people, all dogs are banned from its three public parks, regardless of whether the animals are leashed. Many residents are pushing for a change in policy. Canine lover Sara Northridge observed, "There are 800 or more homes here. There are three parks within 10 minutes, and almost everyone has a dog, but we can't take our dogs there." Others fear that allowing dogs would detract from their enjoyment of the parks. Tim Cortis retorted, "We're not preventing dog lovers from enjoying the park, just come without your dog." Which of the following is a way of dealing with the problem by assigning property rights to a particular group?

Accepted Answer

A)   impose a two-tier entry fee system-a lower fee for non dog owners and a higher fee for dog owners
B)   impose a fee only for dog owners to use the public parks; non dog owners do not pay a fee
C)   dedicate some parks, or at least one park, exclusively for the use of visitors bringing dogs to the park
D)   allow dog owners to bring their dogs to the park but insist that they keep watch over their dogsE) A) and B)
F) A) and C)

Question 19

Economists generally favor the use of tradable emission allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?

Accepted Answer

A)   Some environmentalists believe the allowances give firms a license to pollute.
B)   Some environmentalists believe that the price of allowances is often too high for consumers to afford.
C)   Some environmentalists believe that Pigovian taxes are a more efficient way to reduce pollution.
D)   Some environmentalists oppose allowances on legal grounds; they believe the use of allowances is unconstitutional.E) A) and D)
F) All of the above

Question 20

An external benefit is created when you pursue a college education.

Accepted Answer

A) True 
 B)False

Exam 5: Externalities, Environmental Policy, and Public Goods

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Correct Answer
verified

Correct Answer
verified

Government-imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

Correct Answer
verified

If there is pollution in producing a product, then the market equilibrium price

Correct Answer
verified

Correct Answer
verified

Overuse of a common resource may be avoided by all of the following methods except

Correct Answer
verified

When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts down by the amount of the tax.

Correct Answer
verified

Figure 5-9 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market. -Refer to Figure 5-9. The efficient output is

Correct Answer
verified

Correct Answer
verified

Economists generally favor the use of tradable emission allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?

Correct Answer
verified

An external benefit is created when you pursue a college education.

Correct Answer
verified

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

Correct Answer
verified

Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity?

Correct Answer
verified

Kenneth Chay and Michael Greenstone examined the impact of reductions in air pollution since the passage of the Clean Air Act of 1970. Which of the following statements summarizes their findings?

Correct Answer
verified

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?

Correct Answer
verified
Private benefit from consumption is the ...
View Answer

Common resources differ from public goods in that

Correct Answer
verified

Figure 5-13 Figure 5-13 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13. The efficient equilibrium quantity of gasoline is ________ million gallons per month.

Correct Answer
verified

Correct Answer
verified

A public good is a good that is both rival and excludable.

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Externalities, Environmental Policy, and Public Goods

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Government-imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

Correct AnswerverifiedShow Answer

If there is pollution in producing a product, then the market equilibrium price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Overuse of a common resource may be avoided by all of the following methods except

Correct AnswerverifiedShow Answer

When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts down by the amount of the tax.

Correct AnswerverifiedShow Answer

Figure 5-9 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market. -Refer to Figure 5-9. The efficient output is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists generally favor the use of tradable emission allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?

Correct AnswerverifiedShow Answer

An external benefit is created when you pursue a college education.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity?

Correct AnswerverifiedShow Answer

Kenneth Chay and Michael Greenstone examined the impact of reductions in air pollution since the passage of the Clean Air Act of 1970. Which of the following statements summarizes their findings?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedPrivate benefit from consumption is the ...View AnswerShow Answer

Common resources differ from public goods in that

Correct AnswerverifiedShow Answer

Figure 5-13 Figure 5-13 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 5-13. The efficient equilibrium quantity of gasoline is ________ million gallons per month.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A public good is a good that is both rival and excludable.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Private benefit from consumption is the ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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