ECON Chapter 9
The Coase Theorem will will breakdown when ____________.
A. transaction costs become high. Your answer is correct.B. there are a large number of agents. Your answer is correct.C. when property rights are not clearly defined
Based on these government regulations, if the families have a right to less noise, then the ______ would predict that with private negotiations the _________
Coase Theorem wind farm will offer to pay families to bear the noise
Which of the following is not an externality?
Jordan has lung cancer from smoking cigarettes
What is the intent of a Pigouvian tax?
To induce producers of a negative externality to reduce production to the socially optimal level.
One possible economic solution to the overhunting of rhinos is to __________.
allow private conservation
In this case, rhinos are best categorized as ____________.
common pool
The noise from the wind farm is a
negative externality
Public goods are _______ while common pool are __________
non-rival rival
Suppose that you put an invisible tracking device on your computer that will instantly lead police to it if your computer is ever stolen. Your purchase of the tracking device provides a ____________ for other computer owners.
positive externatity
The Coase Theorem states that ____________.
private bargaining will result in an efficient allocation of resources.
Health insurance is a ________ Radio spectrum is a _______ A video on YouTube is a ________ A mosquito control program is a ___________ A library's collection of e-books is a __________
private good common pool public good public good club good
From an efficiency perspective, Jones _________ allowed to play his opera music.
should be
Jojo's initial shirking is an example of
the free rider problem
overhunting rhinos is an example of
the tragedy of the commons
___________ will vote in favor of the display
One person
Why is the market demand curve for public goods calculated as a vertical summation of individual demand curves?
because the public good is non-rival, so you and others can consume every unit of the good at the same time.
Suppose the production of a particular good causes a negative externality. Based on market forces only, how will this impact the production levels for a factory if negative externalities are present?
It will produce the good above the socially efficient level.
Jones and Smith live in the same apartment building. Jones loves to play his opera recordings so loudly that Smith can hear them. Smith hates opera. Jones receives $100 worth of benefits from his music and Smith suffers $60 worth of damages. According to the Coase Theorem, __________ to compensate for the ______________
Jones will pay $0 to Smith negative externality Jones will pay $60 to Smith negative externality
____________ will provide the display on their own
No one citizen
In your environmental economics study group, a friend argues that using taxes to control pollution is not efficient because, even with taxes, a positive amount of pollution is still produced. Do you agree?
No, because an efficient outcome balances costs with benefits and eliminating all pollution would be cost prohibitive.
Externalities are called market failures because they ___________.
cause markets to produce suboptimal social outcomes.
How does a command-and-control policy differ from a market-based policy?
government directly regulates allocation of resources government provides incentives for private organizations to internalize the externality
The new higher estimate of social cost implies ______ Pigouvian tax required to lead to the efficient level of steel.
higher
The new higher estimate of social cost implies ___________ efficient quantity of steel.
lower
Which of the following is not likely to be subject to the tragedy of the commons?
national defense
An individual or a firm can internalize an externality by ___________.
paying the cost of the externality
Why is it difficult for the market to deliver socially efficient quantities of goods like clean air or street lighting? These are examples of ______________________ ; therefore, even if you _________________ for the good you still _____________________
public goods do not pay get to enjoy it
In terms of efficiency, the fireworks display _____ be offered.
should