10 Flashcards
Pulp and paper mills not only produce paper but they also create dioxin, a byproduct of the manufacturing process. Therefore, which one of the following can be said accurately about this market?
A) equilibrium price and equilibrium output are too high to be socially desirable
B) equilibrium price and equilibrium output are too low to be socially desirable
C) equilibrium price is too low and equilibrium output is too high to be socially desirable
D) equilibrium price is too high and equilibrium output is too low to be socially desirable
C
When a positive externality is present,
A) The private value curve (demand) is below the social value curve for a product
B) The social cost curve is above the private cost curve (supply) of a product
C) The private value curve (demand) is above the social value curve for a product
D). The social cost curve is below the private cost curve (supply) of a product
A
Which of the following is supported by the coase theorem
A) The market can internalize external costs and benefits, and achieve efficiency, if private parties can negotiate solutions to the externalities.
B) Government can improve upon the operation of the market by using environmental controls.
C) The market can internalize externalities if all parties involved have roughly equal bargaining power.
D) correcting externalities through the market can work, but only if the innocent third-party how close he established in a forcible property rights.
A
The purchase of a new car by a resident of downtown Toronto generates
A negative externality
Which one of the following negative externalities would be a target for correction buy gasoline tax, which is a waste tax? A) construction B) accidents C) pollution D) Pedestrian and safety
C
Relative to market-based pollution control policies, which one of the following statements can be made about direct regulation?
A) it requires less detailed information to set pollution limits
B) it provides more of an incentive to develop better technology to clean up beyond the minimum
C) it allows polluters to pollute, at no charge, up to the limits set by the government
D) it makes it easier to find tune regulations for different situations
C
Which one of the following is the essential problem with the existence of externalities?
A) A discrepancy between private and social cost
B) A discrepancy between benefit and social cost
C) I discrepancy between private cost and social benefit
D) Government failure
A
Which of the following describes went to deadweight loss from pollution cleanup occurs?
A) whenever pollution cleanup imposes costs on society
B) whenever society puts a price tag on pollution, thus providing a license to pollute
C) whenever government gets involved
D) whenever some units of pollution cleanup costs more then there marginal benefit to society
D
Suppose that the last unit of output produced at a paper mill has a value to society of $10 and a social cost of $15, but the private cost to the company is $10, and the current price is $10. Which of the following is true
A) The market is in equilibrium, but a lower output would make society better off
B) The market is in equilibrium, but a higher output would make society better off
C) output is too though and price is too high for equilibrium
D) output is too high in price is too low for equilibriumqq
A
In the presence of technology Stella verse, the market tends to blank and blank the product relative to society’s best interest
A) overproduced, under price
B) overproduced, overprice
C) under produce, under price
D) under produce, overprice
D
Which one of the following is an example of a private solution to the problem of externalities? A) green peace Canada B) Canadian national parks C). Canada post D) Natural resources Canada
A
Which one of the following would be achieved by the most efficient pollution control system?
A) each polluter will clean up to the point where total social benefits are maximized
B) each polluter will clean up just to the point where that polluters last unit of cleanup has a social value exactly equal to its social cost
C) each polluter will me exactly the same pollution standards as all other polluters
D) each polluter will clean up to the maximum level that it is technically feasible
B
According to coase theorem, the market can often solve problems of negative externalities on its own. What conditions must hold for the market solutions to work
Parties involved must be able to negotiate a settlement
Transaction cost must be low enough to make it worthwhile
As a result the market is more likely to work efficiently when the affected population is small. Was a large population, it is difficult to identify everyone and work out a settlement.
When the private parties involved can negotiate a solution to a negative externality, does it matter for economic efficiency who pays him? For example if the problem is water pollution, does it matter whether the plater is penalized for polluting, or the victim subsidizes the plater for not planning? Include an example of how such different assignments of property rights to the environment affect the opportunity cost to the Polluter of continuing to pollute.
According to coast theorem, if the affected parties can negotiate a solution to an externality, the result will be the same improvement in economic efficiency regardless of who pays him. If the victims of pollution on the property rights to the environment, they can change the church the polluter for using their scarce resource. It’s a polluter owns the rights, the victims can subsidize the plater in order to cut back on pollution Peter. Either way, the polluter will internalize the pollution cost.
Reducing pollution using pollution permit is quite different from using corrected taxes. What an economist agree? Why or why not
Disagree the two policies have much in common. In both cases, planning firms pay for the pollution they generate. In the case of pollution permits, firms must pay to buy the permit. Even for those firms that already own permits, there is an opportunity cost to polluting that exist in terms of what they could have received by selling their permits. With corrective taxes, firms must pay I love you to the government based on the amount of pollution they generate.
