Econ test 3

The case theorem will break down when

1= transaction cost are high 2= there are a large number of agents 3= property rights are not clearly defined

Externalities are called market failures because they _____

Cause markets to produce suboptimal social outcomes

Library's collection of e-books

Club good

Radio spectrum

Common pool resource

Free rider problem occurs when an individual

Does not pay for a good because nonpayment does not prevent consumption

Command and control policy

Government directly regulates the allocation of resources

Market based policy

Government provides incentives for private organizations to internalize the externality

Public goods

Non rival

What is the pigouvian tax

To induce producers of a negative externality to reduce production to the socially optimal level

Suppose the production of a particular good causes a negative externality Based on market forces only, how will this impact the profuction levels for a factory if negative externalities are present?

It will produce the good above the socially efficient level

which of the following is not and externality

Jordan has lung cancer from smoking cigarettes

Which of the following is NOT likely to be subject to the tragedy of the commons?

National Defense

An individual or firm can internalize the externality by _______

Paying the cost of the externality

The case theorem states that _______

Private bargaining will result in an efficient allocation of resources

Health insurance

Private good

Mosquito control program in a city

Public good

Video on youtube

Public good

Common pool resource goods

Rival