en 10In some cases, pollution permits may be better than a Pigovian tax becauseedSelect one:out ofa. pollution permits allow for a market solution, while a Pigovian tax does notO b. pollution permits generate more revenue for the government than a pigovian taxc. pollution permits are never preferred over a Pigovian taxO d. the government can set a maximum level of pollution using permits on 7When externalities exist, buyers and sellersredSelect one:d out ofa. neglect the external effects of their actions and the market equilibrium is efficientb. do not neglect the external effects of their actions and the market equilibrium is efficientonc. neglect the external effects of their actions and the market equilibrium is not efficientO d. do not neglect the external effects of their actions and the market equilibrium is not efficienton 8A positive consumption externality will cause a market toredSelect one:d out ofa. produce less than is socially desirableO b. produce more than is socially desirableonc. produce more than is market optimalO d. produce less than is market optimalon 9If only a few people are affected by an externalityredSelect one:d out ofa. then it is likely that Pigovian taxes will provide the most efficient solution to the externalityO b. then it is likely that command and control regulation will provide the most efficient solution to the externalityonc. then it is more likely that a private solution to the inefficiency could occurd. then it is likely that a private solution will be very difficult to negotiate

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In some cases, pollution permits may be better than a Pigovian tax because Select one: a. pollution permits allow for a market solution, while a Pigovian tax does not b. pollution permits generate more revenue for the government than a pigovian tax c. pollution permits are never preferred over a Pigovian tax d. the government can set a maximum level of pollution using permits

In some cases, pollution permits may be better than a Pigovian tax because Select one: a. pollution permits allow for a market solution, while a Pigovian tax does not b. pollution permits generate more revenue for the government than a pigovian tax c. pollution permits are never preferred over a Pigovian tax d. the government can set a maximum level of pollution using permits

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 3PA

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Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
Do market demand curves reflect positive externalities? Why or why not?
An increase in globalization has lead to an increase in pollution, and this is a problem because pollution is seen to be the classic example of a This is a that individuals impose on others but do not pay for. O negative externality, cost O possitive externality, benefit O negative externality, benefit O possitive externality, cost
An externality exists whenever O the economy can benefit from government intervention. a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect. O markets are not able to reach equilibrium. O a firm sells its product in a foreign market.
Suppose that elementary education creates a positive externality. If the government does not subsidize education, then Select one: O a. the equilibrium quantity of education is optimal O b. the equilibrium quantity of education will be less than the socially optimal quantity of education O c. the equilibrium quantity of education will be equal to the socially optimal quantity of education O d. the equilibrium quantity of education will be greater than the socially optimal quantity of education Next page o search ..
Time left 0:27:07 Suppose that flu shots create a positive externality equal to $12 per shot. What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced? Select one: The equilibrium quantity is less than the socially optimal quantity. O a. O b. The equilibrium quantity is greater than the socially optimal quantity. Oc. They are equal. O d. No relationship exists. Next page 26°C Mostly cloudy tour on this page Type here to search
Which statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
11. Compared to a good with no externalities, a good with a negative externality will appear to have experienced a OIncrease in Supply ODecrease in Supply Olncrease in Demand ODecrease in Demand at each corresponding price...
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Time left 0:53:28 Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? tion 10 et rered ed out of Select one: ag stion O a. No relationship exists. O b. The equilibrium quantity is less than the socially optimal quantity. O c. The equilibrium quantity is greater than the socially optimal quantity. O d. They are equal. Next page revious page ser tour on this page KT