Question 1

A modern example of the tragedy of the commons is the forests in many poor countries.

Accepted Answer

A) True 
 B)False

Question 2

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

Accepted Answer

If harmed parties do not have rights or ...

Question 3

Goods can be classified on the basis of whether their consumption is

Accepted Answer

A)  internal and excludable.
B)  rival and competitive.
C)  includable and cooperative.
D)  rival and excludable.E) B) and C)
F) All of the above

Question 4

State and local governments subsidize college students with grants and low-interest loans.The loans and subsidies are examples of

Accepted Answer

A)  positive externalities.
B)  Coase subsidies.
C)  Pigovian subsidies.
D)  emission allowances.E) A) and D)
F) C) and D)

Question 5

Applying Coase's theorem,if the cost to you from having the airplane seat in front of you reclined is ________ the benefit to the reclining passenger,you should ________.

Accepted Answer

A)  less than;make a payment to the reclining passenger
B)  greater than;make a payment to the reclining passenger
C)  less than;request a payment from the reclining passenger
D)  greater than;request a payment from the reclining passengerE) A) and D)
F) A) and C)

Question 6

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Accepted Answer

A)  an increase in the equilibrium market price.
B)  a decrease in the equilibrium quantity produced and consumed.
C)  a decrease in market supply of the good.
D)  an increase in demand for the good.E) All of the above
F) A) and B)

Question 7

Figure 5-3 
-Refer to Figure 5-3.In the absence of any government intervention,the private market

Accepted Answer

A)  underproduces by Qo - Qm units.
B)  overproduces by Qo - Qm units.
C)  overproduces by Qn - Qm units.
D)  underproduces by Qn - Qm units.E) A) and C)
F) B) and C)

Question 8

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons?

Accepted Answer

A)  access to the commons can be restricted through community norms and laws
B)  offer subsidies to consumers
C)  force people to move away from the commons
D)  persuade people to use less of the scarce resource through an advertising campaignE) B) and C)
F) None of the above

Question 9

Assume that production from an electric utility caused acid rain.If the government imposed a tax on the utility equal to the marginal external cost of the acid rain,the government's action would

Accepted Answer

A)  externalize the externality.
B)  result in a marginal social benefit greater than the marginal cost of the electricity.
C)  be an example of supply-side economic policy.
D)  internalize the externality.E) C) and D)
F) All of the above

Question 10

Figure 5-3 
-Refer to Figure 5-3.The size of marginal external benefits can be determined by

Accepted Answer

A)  the demand curve D2.
B)  D2 + D1 at each output level
C)  D2 - D1 at each output level.
D)  the demand curve D1.E) B) and D)
F) B) and C)

Question 11

All of the following are examples of public goods except

Accepted Answer

A)  broadcast television with commercials.
B)  clean water systems.
C)  stock of knowledge in the public domain.
D)  crime prevention.E) A) and C)
F) B) and C)

Question 12

Some environmentalists have criticized tradable emission allowances on the grounds that they give permit holders a license to pollute.Furthermore,environmentalists argue that those who sell their permits receive a monetary benefit from their contribution to polluting the environment.Use economic reasoning to evaluate this criticism.

Accepted Answer

The criticism ignores one of the central...

Question 13

Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The size of marginal external costs can be determined by

Accepted Answer

A)  S2 + S1 at each output level.
B)  S2 - S1 at each output level.
C)  the supply curve S2.
D)  the supply curve S1.E) A) and D)
F) B) and D)

Question 14

Which of the following is an example of a Pigovian tax?

Accepted Answer

A)  payments by utilities to obtain tradable emission allowances
B)  a payroll tax
C)  payments for licenses to pollute
D)  a tax imposed on a utility that internalizes the cost of externalities caused by the utilityE) B) and C)
F) A) and D)

Question 15

Figure 5-7 
-Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from QB to QE units?

Accepted Answer

A)  PF
B)  the value of the area QBBEQE
C)  PF × QE
D)  the value of the area BEFE) C) and D)
F) B) and D)

Question 16

Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 5-16 shows their willingness to pay for different quantities of street lights,the market demand for street lights,and the marginal cost of installing the street lights.
-Refer to Figure 5-16.How much is Bree willing to pay per street light to have 4 street lights installed?

Accepted Answer

A)  $1,500
B)  $1,800
C)  $2,700
D)  $7,200E) None of the above
F) A) and C)

Question 17

Define the tragedy of the commons.Give three examples of common resources.Briefly explain why common property resources are subject to overuse.

Accepted Answer

The tragedy of the commons refers to sit...

Question 18

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

Accepted Answer

A)  20
B)  32
C)  48
D)  56E) A) and B)
F) All of the above

Question 19

Ronald Coase is famous for the Coase Theorem,which is based on the premise that there is an economically efficient level of pollution reduction.Many economists believe that the tradable emissions allowance program that has been used to deal with the problem of acid rain has been successful in reducing emissions of sulfur dioxide in an economically efficient manner.Why isn't this program an example of the Coase Theorem?

Accepted Answer

The Coase Theorem states that if transac...

Question 20

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) B) and C)
F) All of the above

Exam 5: Externalities, environmental Policy, and Public Goods

Assume that production from an electric utility caused acid rain.If the government imposed a tax on the utility equal to the marginal external cost of the acid rain,the government's action would

Correct Answer
verified

Correct Answer
verified
The criticism ignores one of the central...
View Answer

Figure 5-3 -Refer to Figure 5-3.The size of marginal external benefits can be determined by

Correct Answer
verified

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Correct Answer
verified

All of the following are examples of public goods except

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

Correct Answer
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A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

Correct Answer
verified
If harmed parties do not have rights or ...
View Answer

Correct Answer
verified
The Coase Theorem states that if transac...
View Answer

Define the tragedy of the commons.Give three examples of common resources.Briefly explain why common property resources are subject to overuse.

Correct Answer
verified
The tragedy of the commons refers to sit...
View Answer

Correct Answer
verified

Applying Coase's theorem,if the cost to you from having the airplane seat in front of you reclined is the benefit to the reclining passenger,you should .

Correct Answer
verified

A modern example of the tragedy of the commons is the forests in many poor countries.

Correct Answer
verified

Figure 5-3 -Refer to Figure 5-3.In the absence of any government intervention,the private market

Correct Answer
verified

Goods can be classified on the basis of whether their consumption is

Correct Answer
verified

Figure 5-7 -Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from QB to QE units?

Correct Answer
verified

Common resources differ from public goods in that

Correct Answer
verified

Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The size of marginal external costs can be determined by

Correct Answer
verified

Which of the following is an example of a Pigovian tax?

Correct Answer
verified

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons?

Correct Answer
verified

State and local governments subsidize college students with grants and low-interest loans.The loans and subsidies are examples of

Correct Answer
verified

Exam 5: Externalities, environmental Policy, and Public Goods

Assume that production from an electric utility caused acid rain.If the government imposed a tax on the utility equal to the marginal external cost of the acid rain,the government's action would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe criticism ignores one of the central...View AnswerShow Answer

Figure 5-3 -Refer to Figure 5-3.The size of marginal external benefits can be determined by

Correct AnswerverifiedShow Answer

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Correct AnswerverifiedShow Answer

All of the following are examples of public goods except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A negative externality is an example of market failure.The root of the problem lies in the definition and enforcement of property rights.Explain.

Correct AnswerverifiedIf harmed parties do not have rights or ...View AnswerShow Answer

Correct AnswerverifiedThe Coase Theorem states that if transac...View AnswerShow Answer

Define the tragedy of the commons.Give three examples of common resources.Briefly explain why common property resources are subject to overuse.

Correct AnswerverifiedThe tragedy of the commons refers to sit...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Applying Coase's theorem,if the cost to you from having the airplane seat in front of you reclined is ________ the benefit to the reclining passenger,you should ________.

Correct AnswerverifiedShow Answer

A modern example of the tragedy of the commons is the forests in many poor countries.

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3.In the absence of any government intervention,the private market

Correct AnswerverifiedShow Answer

Goods can be classified on the basis of whether their consumption is

Correct AnswerverifiedShow Answer

Figure 5-7 -Refer to Figure 5-7.What is the incremental cost of increasing the quantity of pollution reduction from QB to QE units?

Correct AnswerverifiedShow Answer

Common resources differ from public goods in that

Correct AnswerverifiedShow Answer

Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The size of marginal external costs can be determined by

Correct AnswerverifiedShow Answer

Which of the following is an example of a Pigovian tax?

Correct AnswerverifiedShow Answer

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons?

Correct AnswerverifiedShow Answer

State and local governments subsidize college students with grants and low-interest loans.The loans and subsidies are examples of

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The criticism ignores one of the central...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If harmed parties do not have rights or ...
View Answer

Correct Answer
verified
The Coase Theorem states that if transac...
View Answer

Correct Answer
verified
The tragedy of the commons refers to sit...
View Answer

Correct Answer
verified

Applying Coase's theorem,if the cost to you from having the airplane seat in front of you reclined is the benefit to the reclining passenger,you should .

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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