Chp 5

Question 1

​Conceptually, the efficient level of carbon emissions is the level for which

Answer 1

the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

Question 2

Which of the following is a source of market​ failure?

Answer 2

incomplete property rights or inability to enforce property rights

Question 3

Which of the following activities create a negative​ externality?

Answer 3

keeping a junked car parked on your front lawn

Question 4

Which of the following represents the true economic cost of production when firms produce goods that cause negative​ externalities?

Answer 4

the social cost of production.

Question 5

If you burn your trash in the back yard in spite of regulations against​ it, then you are

Answer 5

avoiding the private costs associated with disposing your trash some other way and creating a social cost.

Question 6

What does the phrase​ “internalizing an external​ cost” mean?

Answer 6

forcing producers to factor into their production​ costs, the cost of the externalities created in the production of their output

Question 7

If policymakers use a pollution tax to control​ pollution, the tax per unit of pollution should be set

Answer 7

equal to the marginal external cost at the economically efficient level of pollution.

Question 8

A product is considered to be rivalrous if

Answer 8

your consumption of the product reduces the quantity available for others to consume.

Question 9

A product is considered to be nonexcludable if

Answer 9

you cannot keep those who did not pay for the item from enjoying its benefits.

Question 10

Which of the following displays these two​ characteristics: rivalry and​ nonexcludability?

Answer 10

a common resource.

Question 11

Which of the following displays nonrivalry and nonexcludability in​ consumption?

Answer 11

public goods

Question 12

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

Answer 12

quasipublic goods

Question 13

Common resources differ from public goods in that

Answer 13

unlike public​ goods, common resources are rivalrous in consumption.

Question 14

How does the construction of a market demand curve for a private good differ from that for a public​ good?

Answer 14

The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.