ECO2314 Chap 17

A marginal external cost is the cost of producing an additional unit of a good that falls on the producer.

False

If an activity has an external benefit, such as education, a tax on that activity can lead to the efficient level of output being produced.

False

In an unregulated competitive market, the presence of marginal external benefit from a good or service results in overproduction.

False

The marginal social cost is the cost of producing an additional unit of a good or service that falls on people other than the producer of the good or service.

False

If a product has zero external costs, then marginal social cost equal marginal private cost.

True

In an unregulated competitive market, the presence of marginal external benefit from a good or service results in less than the efficient quantity being produced.

True

In an unregulated competitive market, the presence of marginal external cost of a good or service results in overproduction.

True

The Coase Theorem points out that for an efficient outcome to result, it is irrelevant which party receives the property rights.

True

The marginal social benefit is the sum of the benefit enjoyed by the consumer of an additional unit of a good or service plus the marginal benefit enjoyed by others.

True

When external costs are present and government imposes a tax equal to the external marginal cost, then efficiency can be achieved.

True