Question 1

"Free riding" is a characteristic of which type of good?

Accepted Answer

A)  a private good
B)  a common resource
C)  a public good
D)  a good that is both rival and excludableE) B) and D)
F) C) and D)

Question 2

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

Accepted Answer

A)  excludability.
B)  public rivalry.
C)  free riding.
D)  internalizing an external cost.E) None of the above
F) B) and D)

Question 3

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

Accepted Answer

Private benefit from consumption is the ...

Question 4

Getting an annual flu shot is a way to reduce the chances of not only contracting influenza, but also spreading it to other people.In this sense, getting an annual flu shot is reducing ________ of spreading a contagious disease.

Accepted Answer

A)  positive externalities
B)  negative externalities
C)  the private benefit
D)  the social benefitE) None of the above
F) A) and B)

Question 5

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-2
  
Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The marginal benefit of the last unit produced is represented by the price

Accepted Answer

A)  Pₐ.
B)  Pb.
C)  Pc.
D)  Pf.E) A) and B)
F) A) and C)

Question 7

Which of the following is an example of a Pigovian tax?

Accepted Answer

A)  payments by utilities to obtain tradable emission allowances
B)  a payroll tax
C)  payments for licenses to pollute
D)  a tax imposed on a utility that internalizes the cost of externalities caused by the utilityE) A) and B)
F) A) and C)

Question 8

A major problem with using a tradable emission allowances system to control pollution is

Accepted Answer

A)  that it grants firms a license to pollute.
B)  the difficulty in determining the emissions target.
C)  it discourages firms from implementing cost-effective pollution control technology.
D)  that it does not eliminate pollution completely.E) All of the above
F) B) and C)

Question 9

When there is a positive externality,

Accepted Answer

A)  the marginal private benefit received by consumers is greater than the external benefit.
B)  the marginal social benefit received by consumers is greater than the marginal private benefit.
C)  the marginal private benefit received by consumers is greater than the marginal private cost.
D)  the marginal private benefit received by consumers is greater than the marginal social benefit.E) A) and D)
F) C) and D)

Question 10

Overuse of a common resource may be avoided by all of the following methods except

Accepted Answer

A)  charging for the use of a common resource.
B)  issuing tradable permits for the use of a common resource.
C)  government taking over ownership of all private common resources.
D)  setting quotas or legal limits on the quantity of the common resource consumed.E) B) and D)
F) None of the above

Question 11

Worldwide annual carbon dioxide emissions increased from about 198 million metric tons in 1850 to ________ million metric tons in 2015.

Accepted Answer

A)  1,930
B)  3,855
C)  35,700
D)  246,500E) None of the above
F) A) and B)

Question 12

Figure 5-10
  
Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the marginal social benefits of chicken pox vaccinations exceed the marginal private benefit for any quantity of vaccinations as illustrated in Figure 5-10.
-Refer to Figure 5-10.What is the value of the net gain to society as a result of subsidizing chicken pox vaccinations?

Accepted Answer

A)  (PE × Q
E)  
B)  (PF × QF) 
C)  value equal to the area of EFH
D)  value equal to the area of QFFGQEE) A) and C)
F) None of the above

Question 13

Which of the following best illustrates free riding?

Accepted Answer

A)  Since no one owns elephants and elephants are valued for their hide, meat, and ivory, elephants can be hunted to extinction.
B)  For every purchase of a $30 fare card, you are entitled to five free bus rides.
C)  If your neighbors professionally landscape their front yards, it is likely that the market value of your property will increase.
D)  All three homeowners in a quiet cul-de-sac have expressed the desirability of security lighting in the common parking area. One of the homeowners installs the lighting and asks you to contribute toward the cost. You choose not to contribute.E) B) and D)
F) C) and D)

Question 14

Issuing tradable emission allowances to polluting firms will result in those firms polluting more than is socially desirable.

Accepted Answer

A) True 
 B)False

Question 15

Assume that air pollution from a copper smelter imposes external costs on people who live near the smelter.If the Coase theorem holds and the victims of the pollution could not legally enforce the right of their property not to be damaged, the amount of pollution reduction

Accepted Answer

A)  would be significantly less than if the owners of the smelter were legally liable for damages.
B)  would be less than the amount at which the marginal benefit of pollution reduction equaled the marginal cost.
C)  would be the same as if it would be if the owners of the smelter were legally liable.
D)  would be too small; the government would have to intervene to bring about an efficient outcome.E) A) and D)
F) A) and C)

Question 16

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Accepted Answer

A)  an increase in the equilibrium market price.
B)  a decrease in the equilibrium quantity produced and consumed.
C)  a decrease in market supply of the good.
D)  an increase in demand for the good.E) A) and D)
F) C) and D)

Question 17

Which of the following displays rivalry and excludability in consumption?

Accepted Answer

A)  public goods
B)  private goods
C)  quasi-public goods
D)  common resourcesE) A) and B)
F) C) and D)

Question 18

Free riding refers to a situation in which

Accepted Answer

A)  people consume a pure public good without payment, even though the good may not be produced if no one chooses to pay.
B)  the marginal cost of allowing additional consumers to consume a public good is zero.
C)  high income individuals subsidize the production of goods, such as education, that make society better off.
D)  markets fail to allocate resources efficiently when benefits outweigh costs.E) A) and D)
F) A) and C)

Question 19

Figure 5-3
 m units. B) overproduces by Qₒ - Qm units. C) overproduces by Qn - Qm units. D) underproduces by Qn - Qm units." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-3.In the absence of any government intervention, the private market

Accepted Answer

A)  underproduces by Qₒ - Qm units.
B)  overproduces by Qₒ - Qm units.
C)  overproduces by Qn - Qm units.
D)  underproduces by Qn - Qm units.E) All of the above
F) A) and B)

Question 20

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Accepted Answer

A)  self-interest motives of producers and consumers
B)  a lack of concern for human rights
C)  a lack of competition
D)  a lack of clearly defined and enforced property rightsE) B) and D)
F) None of the above

Exam 5: Externalities, Environmental Policy, and Public Goods

Worldwide annual carbon dioxide emissions increased from about 198 million metric tons in 1850 to ________ million metric tons in 2015.

Correct Answer
verified

Issuing tradable emission allowances to polluting firms will result in those firms polluting more than is socially desirable.

Correct Answer
verified

Getting an annual flu shot is a way to reduce the chances of not only contracting influenza, but also spreading it to other people.In this sense, getting an annual flu shot is reducing ________ of spreading a contagious disease.

Correct Answer
verified

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Correct Answer
verified

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Correct Answer
verified

Correct Answer
verified

A major problem with using a tradable emission allowances system to control pollution is

Correct Answer
verified

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

Correct Answer
verified
Private benefit from consumption is the ...
View Answer

Overuse of a common resource may be avoided by all of the following methods except

Correct Answer
verified

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The marginal benefit of the last unit produced is represented by the price

Correct Answer
verified

Free riding refers to a situation in which

Correct Answer
verified

Which of the following is an example of a Pigovian tax?

Correct Answer
verified

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

Correct Answer
verified

Which of the following best illustrates free riding?

Correct Answer
verified

Which of the following displays rivalry and excludability in consumption?

Correct Answer
verified

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Correct Answer
verified

"Free riding" is a characteristic of which type of good?

Correct Answer
verified

Assume that air pollution from a copper smelter imposes external costs on people who live near the smelter.If the Coase theorem holds and the victims of the pollution could not legally enforce the right of their property not to be damaged, the amount of pollution reduction

Correct Answer
verified

When there is a positive externality,

Correct Answer
verified

Figure 5-3 -Refer to Figure 5-3.In the absence of any government intervention, the private market

Correct Answer
verified

Exam 5: Externalities, Environmental Policy, and Public Goods

Worldwide annual carbon dioxide emissions increased from about 198 million metric tons in 1850 to ________ million metric tons in 2015.

Correct AnswerverifiedShow Answer

Issuing tradable emission allowances to polluting firms will result in those firms polluting more than is socially desirable.

Correct AnswerverifiedShow Answer

Getting an annual flu shot is a way to reduce the chances of not only contracting influenza, but also spreading it to other people.In this sense, getting an annual flu shot is reducing ________ of spreading a contagious disease.

Correct AnswerverifiedShow Answer

When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Correct AnswerverifiedShow Answer

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A major problem with using a tradable emission allowances system to control pollution is

Correct AnswerverifiedShow Answer

What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?

Correct AnswerverifiedPrivate benefit from consumption is the ...View AnswerShow Answer

Overuse of a common resource may be avoided by all of the following methods except

Correct AnswerverifiedShow Answer

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The marginal benefit of the last unit produced is represented by the price

Correct AnswerverifiedShow Answer

Free riding refers to a situation in which

Correct AnswerverifiedShow Answer

Which of the following is an example of a Pigovian tax?

Correct AnswerverifiedShow Answer

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as

Correct AnswerverifiedShow Answer

Which of the following best illustrates free riding?

Correct AnswerverifiedShow Answer

Which of the following displays rivalry and excludability in consumption?

Correct AnswerverifiedShow Answer

Negative externalities and the tragedy of the commons are problems that have a common source.What is this common source?

Correct AnswerverifiedShow Answer

"Free riding" is a characteristic of which type of good?

Correct AnswerverifiedShow Answer

Assume that air pollution from a copper smelter imposes external costs on people who live near the smelter.If the Coase theorem holds and the victims of the pollution could not legally enforce the right of their property not to be damaged, the amount of pollution reduction

Correct AnswerverifiedShow Answer

When there is a positive externality,

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3.In the absence of any government intervention, the private market

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Private benefit from consumption is the ...
View Answer

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Correct Answer
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