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Exam 16: Externalities

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Question 31

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Research and development ________ create an external benefit.With no intervention, we produce too ________ research and development.

A) does; little
B) does not; much
C) does not; little
D) does; much
E) none of the above. Research and development create an external cost.

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Question 32

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Use the table below to answer the following questions. Table 16.2.1 -Refer to Table 16.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.If the market is unregulated, the market price is

A) $10 a unit.
B) $20 a unit.
C) $30 a unit.
D) $40 a unit.
E) $50 a unit.

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Question 33

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Use the table below to answer the following questions. Table 16.2.1 -Refer to Table 16.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.Under these circumstances,

Use the figure below to answer the following questions. Figure 16.2.1 -Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If the market is unregulated, then the quantity produced is

Researchers produce the efficient quantity of research and development if they receive a voucher equal to the marginal ________ benefit, or a subsidy equal to the marginal ________ benefit. Patents and copyrights ________ result in an efficient amount of research and development.

If positive externalities exist and production is left to the private market, then at the quantity produced,

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, ________.

The government department charged with monitoring and protecting the environment is

Use the table below to answer the following questions. Table 16.3.1 -Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.Choose the correct statement.

If the production of a good creates pollution, then the

Which of the following is least likely to display diminishing marginal benefit?

A market economy tends to ________ goods with negative externalities and ________ goods with positive externalities.

One way to solve negative externality problems is

To increase efficiency,

Use the figure below to answer the following questions. Figure 16.2.1 -Refer to Figure 16.2.1.The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve.If a constant per unit tax is imposed that generates an efficient allocation of resources, then the quantity produced is

When Good A is produced, pollution is also produced.When the marginal social cost of production of Good A equals marginal social benefit from Good A, then I. there is no pollution. II. resources are used efficiently.

A voucher can eliminate the deadweight loss and lead to an efficient outcome if the value of the voucher equals the ________ of the good.

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

Most governments subsidize basic education because

Use the table below to answer the following questions. Table 16.3.1 -Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.If production is left to the private market, then at the profit-maximizing output level, marginal