Upgrade to remove ads
Econ 202, section 8.1-8.4
Terms in this set (38)
Which of the following activities create a negative externality?
keeping a junked car parked in your front lawn
When there is a negative externality, the private cost of production ________ the social cost of production.
is less than
are borne by producers of a good while social costs are borne by society at large.
When production generates a negative externality, the true cost of production is the
social cost of production
An externality occurs when ________.
an economic activity affects third parties not engaged in the activity.
If the production of a good involves negative externalities, ________.
the optimal price of the good is higher than the price charged in the market
Conceptually, the efficient level of carbon emissions is the level for which
the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.
The marginal social cost curve ________ when production involves negative externalities.
lies above the social curve
When a negative externality exists, the private market produces
more than the economically efficient output level.
A market demand curve reflects the
private benefits of consuming a product.
Which of the following describes how a positive externality affects a competitive market?
The externality causes a difference between the private benefit from consumption and the social benefit.
A positive externality ________.
gives rise to external benefits
The marginal social benefit from the production of the last unit of a good is $4,800. If the willingness to pay for that unit is $3,900, what is the external benefit from its production?
When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.
A positive externality causes
the marginal social benefit to exceed the marginal private cost of the last unit produced.
If the social benefit of consuming a good or a service exceeds the private benefit
a positive externality exists.
If the production of a good involves positive externalities, ________.
the market price of the good is lower than its optimal price
Which of the following occurs if the production of a good gives rise to positive externalities?
The marginal social benefit curve lies to the right of the demand curve.
The Coase theorem relies on internalizing externalities through ________.
negotiations between the parties involved
Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain then, according to the Coase theorem
an efficient solution can be reached regardless of the initial assignment of property rights.
The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called
Which of the following is an implication of the Coase Theorem?
Government intervention is not always necessary to solve externality problems.
If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
equal to the marginal external cost at the economically efficient level of pollution.
Which of the following happens when a Pigouvian subsidy is provided?
The marginal private benefit curve shifts upward
Governments can increase the consumption of a product that creates positive externalities by
subsidizing the production of the product so that the supply is increased and market price is reduced.
Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of
a command-and-control approach to pollution reduction
If production of a good gives rise to a negative externality, it can be internalized by taxing the producers of the good.
A Pigouvian subsidy leads to a socially efficient outcome by _________.
raising individuals' marginal benefit from consumption
A carbon tax which is designed to reduce pollution is an example of a
An economic agent ________ when he accounts for the full costs and benefits of his actions
internalizes an externality
The production of steel in a factory generates a negative externality. A per-unit tax on the factory that equals ________ of steel production will internalize the externality entirely.
the marginal external cost
The production of an industrial good in a plant emits harmful gases that cause breathing difficulty. Which of the following will happen if the government imposes a Pigouvian tax on the plant?
The quantity supplied of the good will decrease.
cost borne by the producer of a good or service
is the total cost of producing a good or service, including both the external and private cost
benefit received by the consumer of a good or service
the total benefit from consuming a good or service, and it is equal to the private benefit plus any external benefit (benefit to others from you receiving a college education)
too much of the good will be produced at market equilibrium
too little of the good will be produced at market equilibrium
THIS SET IS OFTEN IN FOLDERS WITH...
Problem set 6
Econ 202 Tamu Module 8.6 - 8.12
Econ 202: Chapter 8: Externatlities
3.2 Test Bank
YOU MIGHT ALSO LIKE...
ECON Module 8
FINAL EXAM ECONOMICS
ECON 202 8.2
Econ exam 2
OTHER SETS BY THIS CREATOR
Final exam POLS 206 LEWIS
POLS 206 exam 1
Nutrition 202 exam 2
POLS 207 test #1
OTHER QUIZLET SETS
CED 201 Cumulative Exam Multiple Choice
Eco 132 -Study Test
CED 201 Final Exam (Spring 2018)