x
Info
x
Warning
x
Danger
 / 
 / 
 / 
41) An externality is A) the amount by which price exceeds

Question : 41) An externality is A) the amount by which price exceeds : 1418041

 

 

41) An externality is

A) the amount by which price exceeds marginal private cost.

B) the amount by which price exceeds marginal social cost.

C) the effect of government regulation on market price and output.

D) someone who consumes a good without paying for it.

E) a cost or benefit that arises from an activity but affects people not part of the original activity.

 

42) The marginal private cost curve (MC) is a positively-sloped straight line starting at the origin. If marginal external cost increases as output increases, then the marginal social cost curve is a positively-sloped straight line

A) parallel to and above the MC curve.

B) parallel to and below the MC curve.

C) starting at the origin, above the MC curve, and with a slope greater than the MC curve.

D) starting at the origin, below the MC curve, and with a slope less than the MC curve.

E) none of the above.

 

43) One way to solve negative externality problems is

A) to organize a limited boycott of the products.

B) subsidize the externalities.

C) eliminate transactions costs when property rights are not legally established.

D) issue marketable permits to polluting firms.

E) establish and enforce patents and copyrights.

44) Pollution occurs when lumber is produced. If the lumber market is unregulated, there would be

A) overproduction of lumber compared to the efficient amount.

B) underproduction of lumber compared to the efficient amount.

C) sometimes overproduction and sometimes underproduction of lumber compared to the efficient amount.

D) an external benefit from producing lumber.

E) no deadweight loss from production.

 

45) When the marginal social cost of the production of Good A is greater than the marginal private cost of the production of Good A, then

A) a competitive, unregulated market produces less than the efficient quantity of Good A.

B) a competitive, unregulated market produces the efficient quantity of Good A.

C) a competitive, unregulated market produces more than the efficient quantity of Good A.

D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves.

E) a competitive, unregulated market does not create a deadweight loss.

 

46) When the production of a good has an external cost, the

A) marginal social cost curve lies below the marginal private cost curve.

B) marginal social benefit curve lies above the marginal private benefit curve.

C) equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit.

D) equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.

E) none of the above.

47) Consider some type of industrial pollution that generates air pollution.  This industry, if left unregulated, will produce

A) too much output because they will ignore the marginal external costs.

B) the efficient level of output.

C) too little output because they will ignore the marginal external costs.

D) too little output because they will ignore the marginal external benefits.

E) too much output because they will ignore the marginal external benefits.

 

Use the table below to answer the following question.

 

Table 16.2.3

 

Price

Quantity

Marginal cost

(cents per kilowatt)

(kilowatts per day)

(cents per kilowatt)

4

500

10

8

400

8

12

300

6

16

200

4

20

100

2

 

48) Refer to Table 16.2.3. The first two columns of the table show the demand schedule for electricity from a coal burning utility; the second and third columns show the utility's cost of producing electricity.

The marginal external cost of the pollution created is equal to the marginal cost.

Suppose the government levies a pollution tax such that the utility generates the efficient quantity of electricity. The pollution tax is ________ cents a kilowatt hour.

A) 2

B) 4

C) 6

D) 8

E) 10

49) Betty and Anna work at the same office in Calgary. They both must attend a meeting in Edmonton, and they have decided to drive to the meeting together.

Betty is a cigarette smoker and her marginal benefit from smoking one package of cigarettes a day is $40. Cigarettes are $6 a pack.

Anna dislikes cigarette smoke and her marginal benefit from a smoke-free environment is $50 a day.

If Betty drives her car with Anna as a passenger, ________. If Anna drives her car with Betty as a passenger, ________.

A) Anna will offer Betty an amount between $34 and $50 and Betty will not smoke; Betty does not smoke because Betty will not offer Anna a high enough price to be allowed to smoke

B) Betty will smoke because she owns the property rights in the car; Betty does not smoke because Betty will not offer Anna a high enough price to be allowed to smoke

C) Betty will smoke because she owns the property rights in the car; Betty will offer Anna $51 and Betty will smoke

D) Anna will offer Betty an amount between $34 and $50 and Betty will not smoke; Betty will offer Anna $51 and Betty will smoke

E) Betty will smoke because she is the car owner; Betty will offer Anna an amount between $34 and $50 and Betty will smoke

 

50) When the government issues marketable permits

A) each firm buys or sells permits until its marginal benefit from polluting equals the market price of a permit.

B) firms that have a low marginal cost of reducing pollution sell their permits, and firms that have a high marginal cost of reducing pollution buy permits.

C) the incentive to pollute is greater than when the government sets emission charges.

D) the price at which firms buy and sell permits is set by the government.

E) firms that have a high marginal cost of reducing pollution sell their permits, and firms that have a low marginal cost of reducing pollution buy permits.

 

 

Solution
5 (1 Ratings )

Solved
Economics 1 Year Ago 50 Views
This Question has Been Answered!
Unlimited Access Free
Explore More than 2 Million+
  • Textbook Solutions
  • Flashcards
  • Homework Answers
  • Documents
Signup for Instant Access!
Ask an Expert
Our Experts can answer your tough homework and study questions
119145 Economics Questions Answered!
Post a Question