Question 1

Even if possible,it would be inefficient to prohibit all polluting activity.

Accepted Answer

A) True 
 B)False

Question 2

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

Accepted Answer

A) True 
 B)False

Question 3

Many charities like the Sierra Club are established to deal with externalities.

Accepted Answer

A) True 
 B)False

Question 4

A gasoline tax is designed to correct each of the following problems except

Accepted Answer

A)   traffic congestion.
B)   traffic accidents.
C)   air pollution.
D)   EPA regulations.E) A) and B)
F) All of the above

Question 5

Economists believe that the optimal level of pollution is zero.

Accepted Answer

A) True 
 B)False

Question 6

The gasoline tax

Accepted Answer

A)   is similar to most other taxes in that it causes deadweight losses.
B)   produces the unfortunate side-effect of making the roads more dangerous.
C)   can be viewed as a corrective tax aimed at multiple negative externalities associated with driving.
D)   can be viewed as a command-and-control policy aimed at discouraging people from driving.E) None of the above
F) C) and D)

Question 7

In summarizing the research on the externalities associated with driving cars,a 2007 Journal of Economic Literature article concluded that the optimal corrective tax on gasoline in the United States would be

Accepted Answer

A)   $0.40 per gallon.
B)   $0.90 per gallon.
C)   $2.10 per gallon.
D)   $3.30 per gallon.E) B) and C)
F) C) and D)

Question 8

A cost imposed on someone who is neither the consumer nor the producer is called a

Accepted Answer

A)   corrective tax.
B)   command and control policy.
C)   positive externality.
D)   negative externality.E) C) and D)
F) A) and C)

Question 9

Figure 10-10 th unit of output is $12. B)  The social cost of producing the 120th unit of output is $22. C)  The external cost of producing the 120th unit of output is $2. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10-10.Which of the following statements is correct?

Accepted Answer

A)   The private cost of producing the 120th unit of output is $12.
B)   The social cost of producing the 120th unit of output is $22.
C)   The external cost of producing the 120th unit of output is $2.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 10

A patent is used to

Accepted Answer

A)   disseminate information.
B)   offset the negative effects of taxes.
C)   protect inventors for as long as they live.
D)   assign property rights.E) None of the above
F) A) and C)

Question 11

Figure 10-10 th unit of output is $16. B)  The social cost of producing the 160th unit of output is $22. C)  The external cost of producing the 160th unit of output is $6. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10-10.Which of the following statements is correct?

Accepted Answer

A)   The private cost of producing the 160th unit of output is $16.
B)   The social cost of producing the 160th unit of output is $22.
C)   The external cost of producing the 160th unit of output is $6.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 12

When we identify public policies toward externalities,we contrast command-and-control policies with what other type of policies?

Accepted Answer

The other type of po...

Question 13

In the case of a technology spillover,the government can encourage firms to internalize a positive externality by

Accepted Answer

A)   taxing production,which would decrease supply.
B)   taxing production,which would increase supply.
C)   subsidizing production,which would decrease supply.
D)   subsidizing production,which would increase supply.E) A) and B)
F) C) and D)

Question 14

Scenario 10-3
Suppose the equation for the demand curve in a market is  ,where  is the quantity demanded and  is the price.Also,suppose the equation for the supply curve in the same market is  ,where  is the quantity supplied.
-Refer to Scenario 10-3.Suppose there is an external cost of $12 associated with the production of each unit of the good.What are the socially optimal quantity and price?

Accepted Answer

The socially optimal...

Question 15

Two firms,A and B,each currently dump 20 tons of chemicals into the local river.The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river.The government gives each firm 10 pollution permits,which it can either use or sell to the other firm.It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river,and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river.After the two firms buy or sell pollution permits from each other,we would expect that

Accepted Answer

A)   Firm A will no longer pollute,and Firm B will not reduce its pollution at all.
B)   Firm B will no longer pollute,and Firm A will not reduce its pollution at all.
C)   Firm A will dump 10 tons of pollution into the river,and Firm B will dump 10 tons of pollution into the river.
D)   Firm A will increase its pollution and Firm B will reduce its pollution.E) B) and C)
F) All of the above

Question 16

Which of the following statements is not correct?

Accepted Answer

A)   A patent is a way for the government to encourage the production of a good with technology spillovers.
B)   A tax is a way for the government to reduce the production of a good with a negative externality.
C)   A tax that accurately reflects social costs produces the socially optimal outcome.
D)   Government policies cannot improve upon private market outcomes.E) A) and C)
F) All of the above

Question 17

Figure 10-7 1. B)  Q2. C)  Q3. D)  Q4." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10-7.Which quantity represents the social optimum for this market?

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q4.E) A) and B)
F) A) and C)

Question 18

Which of the following require firms to pay to pollute? (i) 
Corrective taxes
(ii) 
Tradable pollution permits
(iii) 
Pollution regulations

Accepted Answer

A)   (i) only
B)   both (i) and (ii) 
C)   (iii) only
D)   both (ii) and (iii) E) B) and C)
F) C) and D)

Question 19

The goal of industrial policy should be that

Accepted Answer

A)   industries yielding the largest positive externalities should receive the biggest subsidies.
B)   any industry that produces negative externalities should be heavily taxed.
C)   any production process that produces negative externalities should be shut down.
D)   all industries that produce positive externalities should be equally subsidized.E) B) and C)
F) All of the above

Question 20

Figure 10-10 
-Refer to Figure 10-10.Taking into account private and external costs,the maximum total surplus that can be achieved in this market is

Accepted Answer

A)   $760.
B)   $1,080.
C)   $1,440.
D)   $1,920.E) A) and B)
F) A) and C)

Exam 10: Externalities

Figure 10-10 -Refer to Figure 10-10.Taking into account private and external costs,the maximum total surplus that can be achieved in this market is

Correct Answer
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Many charities like the Sierra Club are established to deal with externalities.

Correct Answer
verified

A cost imposed on someone who is neither the consumer nor the producer is called a

Correct Answer
verified

Figure 10-10 -Refer to Figure 10-10.Which of the following statements is correct?

Correct Answer
verified

A patent is used to

Correct Answer
verified

In summarizing the research on the externalities associated with driving cars,a 2007 Journal of Economic Literature article concluded that the optimal corrective tax on gasoline in the United States would be

Correct Answer
verified

When we identify public policies toward externalities,we contrast command-and-control policies with what other type of policies?

Correct Answer
verified
The other type of po...
View Answer

A gasoline tax is designed to correct each of the following problems except

Correct Answer
verified

Which of the following require firms to pay to pollute? (i) Corrective taxes (ii) Tradable pollution permits (iii) Pollution regulations

Correct Answer
verified

In the case of a technology spillover,the government can encourage firms to internalize a positive externality by

Correct Answer
verified

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

Correct Answer
verified

Correct Answer
verified
The socially optimal...
View Answer

Economists believe that the optimal level of pollution is zero.

Correct Answer
verified

Figure 10-7 -Refer to Figure 10-7.Which quantity represents the social optimum for this market?

Correct Answer
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Correct Answer
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Figure 10-10 -Refer to Figure 10-10.Which of the following statements is correct?

Correct Answer
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The goal of industrial policy should be that

Correct Answer
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The gasoline tax

Correct Answer
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Even if possible,it would be inefficient to prohibit all polluting activity.

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Exam 10: Externalities

Figure 10-10 -Refer to Figure 10-10.Taking into account private and external costs,the maximum total surplus that can be achieved in this market is

Correct AnswerverifiedShow Answer

Many charities like the Sierra Club are established to deal with externalities.

Correct AnswerverifiedShow Answer

A cost imposed on someone who is neither the consumer nor the producer is called a

Correct AnswerverifiedShow Answer

Figure 10-10 -Refer to Figure 10-10.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A patent is used to

Correct AnswerverifiedShow Answer

In summarizing the research on the externalities associated with driving cars,a 2007 Journal of Economic Literature article concluded that the optimal corrective tax on gasoline in the United States would be

Correct AnswerverifiedShow Answer

When we identify public policies toward externalities,we contrast command-and-control policies with what other type of policies?

Correct AnswerverifiedThe other type of po...View AnswerShow Answer

A gasoline tax is designed to correct each of the following problems except

Correct AnswerverifiedShow Answer

Which of the following require firms to pay to pollute? (i) Corrective taxes (ii) Tradable pollution permits (iii) Pollution regulations

Correct AnswerverifiedShow Answer

In the case of a technology spillover,the government can encourage firms to internalize a positive externality by

Correct AnswerverifiedShow Answer

Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe socially optimal...View AnswerShow Answer

Economists believe that the optimal level of pollution is zero.

Correct AnswerverifiedShow Answer

Figure 10-7 -Refer to Figure 10-7.Which quantity represents the social optimum for this market?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 10-10 -Refer to Figure 10-10.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The goal of industrial policy should be that

Correct AnswerverifiedShow Answer

The gasoline tax

Correct AnswerverifiedShow Answer

Even if possible,it would be inefficient to prohibit all polluting activity.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Correct Answer
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The other type of po...
View Answer

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Correct Answer
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Correct Answer
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The socially optimal...
View Answer

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