Microeconomics Chapter 8
The Coase Theorem will will breakdown when ____________. (select all that apply)
1) transaction costs become high. 2) when property rights are not clearly defined. 3) are a large number of agents
Private provision of public goods is often accomplished through _______ and _______ related to the overall wealth of the economy.
Charity, Directly
A library's collection of e-books is a
Club good
Radio spectrum is a
Common pool resource
Socially accepted methods of behavior can _________ internalizing of negative externalities. Financial rewards _______ achieve the same result.
Encourage, Can
What approach would be the least effective way to deal with free riders?
Exclude citizens from benefiting from the good or service.
A corrective subsidy would be used when marginal social benefit is ________ than market demand. This causes the _________ to internalize the externality.
Greater, Consumer
Which of the following is not an externality?
Jordan has lung cancer from smoking cigarettes.
Negative externalities cause a _______ shift of the supply curve and ________ in market quantity. Recognizing this deadweight loss ________ result in elimination of the externality.
Leftward, Decrease, Will not
Common pool resource goods are different from public goods because they are _________ which can result in ________ externalities due to _______ demand.
Non-exclusionary but rival, Negative, Increased
Market inefficiencies result from all of the following, except:
Pecuniary externalities.
Health insurance is a
Private good
Furthermore, you conclude that when there are negative externalities present, free markets ___________ and when there are positive externalities present, free markets
Produce too much, produce too little
The government could encourage the production of the efficient number of ITNs by ____________.
Providing a subsidy for ITNs.
A mosquito control program in a city is a
Public good
A video on YouTube is a
Public good
Positive externalities result in a ______ shift of the _______ curve. There ________ a deadweight loss with a positive externality.
Rightward, Demand, Is
Which of the following would not be considered a common pool resource good?
Streetlight
Which of the following would be an example of the Coase Theorem?
The homeowners association provides a fireworks show that ends at 10 p.m.
All of the following statements about Pigouvian taxes are true, except:
They are designed to increase quantity toward optimal quantity.
Which of the following would be considered a true public good?
a road sign
Command-and-control policies
could be used to mandate usages to businesses.
The market demand curve for a public good
is found by summing all of the individual's marginal benefit at a given quantity.
Negative externalities impose an additional cost that:
is not explicitly recognized by the buyers and sellers in the market.
The Coase Theorem states that ____________.
private bargaining will result in an efficient allocation of resources.
When bargaining to deal with negative externalities
the cost falls on the party with the most to gain.
Based on your conversations today and your economics experience, you conclude that when externalities are present,
the free market outcome is not efficient
The free-rider dilemma occurs because
the marginal benefit to a group is different than to that of the individual.
