ch 10

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

when technology spillover occurs...

a firms research yields technological knowledge that can then be used by society as a whole

externalities tend to cause markets to be...

inefficient

would pollution permits or Pigovian taxes be better at limiting the quantity of pollution?

Pigovian Tax would be more efficient as it give strong incentive for the firm to find alternative than paying the pollution tax.

Why might a Pigovian tax or tradable pollution permits be more effective than command and control policies?

With Pigovian taxes, polluting firms must pay a tax to the government. With pollution permits, polluting firms must pay to buy the permit. Both corrective taxes and pollution permits internalize the externality of pollution by making it costly for firms to pollute.

Two types of private solutions to the problem of externalities are...

charities and the golden rule

private markets fail to account for externalities because...

decision makers in the market fail to include the costs of their behavior to third parties

what are examples/types of market-based solutions

market-based solutions are organized so that ​companies, ​prices, and ​production are ​controlled naturally by the ​supply of and ​demand for ​goods and ​services, rather than by a ​government:

government should tax goods with...

negative externalities and subsidize goods with positive externalities

what does "command and control" mean?

rules, regulations, and laws

a paper plant produces water pollution during the production process. If the government forces the plant to internalize the negative externality, then the...

supply curve for paper would shift to the left

what is a Pigovian tax?

the most efficient and effective way to correct negative externalities. A type of a Pigovian tax is a "sin tax" which is a special tax on tobacco products and alcohol

what is coase theorem

the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own.

suppose that cookie producers create a positive externality equal to $2 per-dozen. Further suppose that the government offers a $2 per-dozen subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced?

they are equal

why do private solutions not always work?

two parties can't always come to an agreement


संबंधित स्टडी सेट्स

Psychology, Chapter 1, Introduction & Research Methods

View Set

Chapter 20: Practical Contracts and the Lawyer Practice Test

View Set

Review of Physiological Adaptation, Pharmacological Therapy, and Health As EAQ

View Set

ALGEBRA II: L3 Exponents and Relations

View Set

Psychology Final Exam Study Guide

View Set