Microeconomics Chapter 16 Questions

(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. The efficient quantity of pollution is _____ tons.

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Network externalities are often:

a reason for natural monopolies

Which of the following is an environmental policy based on tradable emission permits?

allowing companies to buy and sell the right to a certain level of emissions

Both emissions taxes and tradable emissions permits:

an increase in the number of other people using the good increases its value to an individual.

(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if there are external costs, a tax imposed on sellers will:

decrease the equilibrium quantity

For the same amount of pollution emitted, an emissions tax is said to be more efficient than an environmental standard because all polluters:

emit pollution up to the point at which the marginal benefit of polluting is equal to the emissions tax

Your community requires the sewage treatment plant to process raw sewage so that it is safe to return the water to the environment. This is:

environmental standard

The marginal social benefit received from pollution is equal to its marginal social cost in the market for highly polished glass. In this situation:

firms in the market produce the socially optimal level of pollution.

If drivers decide to make phone calls without considering the costs imposed on others, the:

number of phone calls made while driving will be more than the socially optimal quantity

External benefits are associated with the production of batteries. Without government regulation, the market will:

price batteries at less than the marginal social benefit

According to the Coase theorem, when negative externalities are present, a market will:

reach an efficient solution if transaction costs are low and property rights are well-defined.

The efficient rate of emissions occurs when:

the change in social benefits and the change in social costs due to an additional unit of emissions are equal.

Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is:

the level at which the marginal social cost is equal to the marginal social benefit.

(Figure: The Quantity of Pollution) Look at the table The Quantity of Pollution. If the amount of pollution emitted is 150:

the production of pollution is not socially optimal.

(Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution. If the government imposed an environmental standard that did not allow the quantity of pollution to exceed 20 tons, there would be:

too little pollution, because its marginal social benefit would exceed its marginal social cost.

(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. If 5 tons of pollution is produced:

too much pollution is produced.

(Table: Externalities from Parks) The table Externalities from Parks shows the marginal social benefit and the marginal social cost of preserving various amounts of land in a city for a public park. If 1 acre is dedicated to the park, the park is:

too small