Question 1

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

Accepted Answer

A)  command-and-control policies.
B)  strong-arm tactics.
C)  global initiatives.
D)  market-based policies.E) B) and C)
F) None of the above

Question 2

Consider the following characteristics:
A.low transactions 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 onlyE) A) and D)
F) C) and D)

Question 3

When there is a positive externality

Accepted Answer

A)  the marginal private benefit received by consumers is greater than the external benefit.
B)  the marginal social benefit received by consumers is greater than the marginal private benefit.
C)  the marginal private benefit received by consumers is greater than the marginal private cost.
D)  the marginal private benefit received by consumers is greater than the marginal social benefit.E) A) and D)
F) None of the above

Question 4

Which of the following is an example of a positive externality?

Accepted Answer

A)  raising the speed limit to 60 mph in school zones
B)  planting trees along a sidewalk which add beauty and create shade
C)  permitting smoking on commercial airplanes
D)  a police department stops enforcing DUI lawsE) B) and C)
F) A) and C)

Question 5

Figure 5-13
  
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 price of gasoline is ________ per gallon.

Accepted Answer

A)  $3.00
B)  $3.75
C)  $4.25
D)  $5.00E) B) and D)
F) B) and C)

Question 6

Figure 5-2
  
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 C)

Question 7

Figure 5-8
  
Consider a chemical plant that discharges toxic fumes over a nearby community.To reduce the emissions of toxic fumes the firm can install pollution abatement devices.Figure 5-8 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.
-Refer to Figure 5-8.What is the economically efficient level of pollution reduction?

Accepted Answer

A)  12.5 million tons
B)  9 million tons
C)  8 million tons
D)  0 tonsE) C) and D)
F) None of the above

Question 8

If the social cost of producing a good or service exceeds the private cost

Accepted Answer

A)  a positive externality exists.
B)  the sum of consumer surplus and producer surplus is maximized.
C)  the market achieves economic efficiency.
D)  a negative externality exists.E) C) and D)
F) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

A positive externality causes

Accepted Answer

A)  the marginal social benefit to be equal to the marginal private cost of the last unit produced.
B)  the marginal social benefit to be less than the marginal private cost of the last unit produced.
C)  the marginal social benefit to exceed the marginal private cost of the last unit produced.
D)  the marginal private benefit to exceed the marginal social cost of the last unit produced.E) A) and C)
F) B) and C)

Question 12

A tragedy of the commons occurs when a resource is

Accepted Answer

A)  rival and excludable.
B)  rival and non-excludable.
C)  non-rival and non-excludable.
D)  non-rival and excludable.E) B) and C)
F) A) and D)

Question 13

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Accepted Answer

A) True 
 B)False

Question 14

An externality is

Accepted Answer

A)  a benefit realized by the purchaser of a good or service.
B)  a cost paid for by the producer of a good or service.
C)  a benefit or cost experienced by someone who is not a producer or consumer of a good or service.
D)  anything that is external or not relevant to the production of a good or service.E) B) and D)
F) C) and D)

Question 15

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Accepted Answer

Free riding is benefiting from a good wi...

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Accepted Answer

A) True 
 B)False

Question 18

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Accepted Answer

A)  self-interest motives of producers and consumers
B)  a lack of concern for human rights
C)  a lack of competition
D)  a lack of clearly defined and enforced property rightsE) B) and C)
F) A) and D)

Question 19

A carbon tax which is designed to reduce pollution is an example of a

Accepted Answer

A)  command-and-control policy.
B)  government administrative rule.
C)  noneffective incentive.
D)  market-based policy.E) A) and C)
F) A) and B)

Question 20

Which of the following displays these two characteristics: nonrivalry and excludability?

Accepted Answer

A)  public goods
B)  private goods
C)  quasi-public goods
D)  common resourcesE) A) and D)
F) A) and B)

Exam 5: Externalities, Environmental Policy, and Public Goods

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

Correct Answer
verified

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

Correct Answer
verified

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

Correct Answer
verified

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Correct Answer
verified

Which of the following displays these two characteristics: nonrivalry and excludability?

Correct Answer
verified

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Correct Answer
verified
Free riding is benefiting from a good wi...
View Answer

If the social cost of producing a good or service exceeds the private cost

Correct Answer
verified

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

Correct Answer
verified

A tragedy of the commons occurs when a resource is

Correct Answer
verified

An externality is

Correct Answer
verified

Figure 5-2 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

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Correct Answer
verified

A carbon tax which is designed to reduce pollution is an example of a

Correct Answer
verified

A positive externality causes

Correct Answer
verified

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Correct Answer
verified

Figure 5-13 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 price of gasoline is ________ per gallon.

Correct Answer
verified

Which of the following is an example of a positive externality?

Correct Answer
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Correct Answer
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Consider the following characteristics: A.low transactions 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?

Correct Answer
verified

When there is a positive externality

Correct Answer
verified

Exam 5: Externalities, Environmental Policy, and Public Goods

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the federal government orders firms to use particular methods to reduce pollution, it is said to be using

Correct AnswerverifiedShow Answer

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

Correct AnswerverifiedShow Answer

Which of the following displays these two characteristics: nonrivalry and excludability?

Correct AnswerverifiedShow Answer

Explain how the decision by parents to not immunize their children, hoping that their children will not get sick because other parents have had their children immunized, is an example of free riding.How is this behavior dangerous to the public?

Correct AnswerverifiedFree riding is benefiting from a good wi...View AnswerShow Answer

If the social cost of producing a good or service exceeds the private cost

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tragedy of the commons occurs when a resource is

Correct AnswerverifiedShow Answer

An externality is

Correct AnswerverifiedShow Answer

Figure 5-2 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

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Correct AnswerverifiedShow Answer

A carbon tax which is designed to reduce pollution is an example of a

Correct AnswerverifiedShow Answer

A positive externality causes

Correct AnswerverifiedShow Answer

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Correct AnswerverifiedShow Answer

Figure 5-13 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 price of gasoline is ________ per gallon.

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive externality?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider the following characteristics: A.low transactions 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?

Correct AnswerverifiedShow Answer

When there is a positive externality

Correct AnswerverifiedShow Answer

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Free riding is benefiting from a good wi...
View Answer

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