Question 1

Producing paper creates pollution.There is no externality in the consumption of paper.The efficient quantity of paper produced occurs when the

Accepted Answer

The efficient quantity of paper produced occurs when the marginal social benefit from paper is equal to the marginal social cost of paper, taking into account the pollution created during production. This ensures that society is producing the optimal amount of paper, considering both the benefits and costs.

Question 2

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a voucher is given to consumers that generates an efficient outcome,then producers receive a price of

Accepted Answer

The efficient outcome occurs where the marginal social benefit equals the market supply curve. At this point, the price received by producers is P₃ per unit.

Question 3

Use the table below to answer the following questions.
Table 16.3.1
 $$\begin{array} { c c c c } 
\hline\begin{array} { c } 
\text { Output } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Marginal Private } \
\text { Benefit } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Benefit } \
\text { (dollars) }
\end{array} \
\hline 0 & 80 & 20 & 100 \
1 & 70 & 30 & 90 \
2 & 60 & 40 & 80 \
3 & 50 & 50 & 70 \
4 & 40 & 60 & 60 \
5 & 30 & 70 & 50 \
6 & 20 & 80 & 40\\hline
\end{array}$$
-Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.Choose the correct statement.

Accepted Answer

The answer of Use the table below to answer the...

Question 4

Use the table below to answer the following questions.
Table 16.3.1
 $$\begin{array} { c c c c } 
\hline\begin{array} { c } 
\text { Output } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Marginal Private } \
\text { Benefit } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Benefit } \
\text { (dollars) }
\end{array} \
\hline 0 & 80 & 20 & 100 \
1 & 70 & 30 & 90 \
2 & 60 & 40 & 80 \
3 & 50 & 50 & 70 \
4 & 40 & 60 & 60 \
5 & 30 & 70 & 50 \
6 & 20 & 80 & 40\\hline
\end{array}$$
-Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.If production is left to the private market,the quantity produced is

Accepted Answer

The answer of Use the table below to answer the...

Question 5

A chemical factory and a fishing club share a lake.Producing chemicals creates water pollution that harms the fish.Initially the lake is owned by no one.Keeping in mind the Coase theorem,suppose transactions costs are low and the chemical factory is given ownership of the lake.Compared to the situation with no property rights,the quantity of chemicals produced

Accepted Answer

With ownership of the lake, the chemical factory now has an incentive to consider the cost of pollution to the fishing club. They may choose to reduce their chemical production in order to avoid costs that come with harming the fish, thereby decreasing the quantity of chemicals produced.

Question 6

Consider the production of pesticide that pollutes a lake used by a trout farmer.A marketable permit

Accepted Answer

Marketable permits create an efficient outcome when the price of the permit equals the external cost. This ensures that producers take into account the negative externality imposed on the trout farmer and reduces the pollution level to an appropriate level. Option B and C are not necessarily true because assignment of property rights does not fully address the negative externality issue. Option D is incorrect as Pigovian tax and marketable permit may result in the same outcome when the tax rate is equivalent to the permit price. Option E is incorrect as the scenario does not mention any external benefit, only external cost.

Question 7

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then

Accepted Answer

The efficient quantity is where the marginal social benefit curve intersects with the market supply curve. However, in this case, the quantity produced is where the marginal private benefit curve intersects with the market supply curve, which is less than the efficient quantity. Therefore, the private market produces less than the efficient quantity, resulting in a deadweight loss.

Question 8

Use the table below to answer the following questions.
Table 16.3.1
 $$\begin{array} { c c c c } 
\hline\begin{array} { c } 
\text { Output } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Marginal Private } \
\text { Benefit } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal Social } \
\text { Benefit } \
\text { (dollars) }
\end{array} \
\hline 0 & 80 & 20 & 100 \
1 & 70 & 30 & 90 \
2 & 60 & 40 & 80 \
3 & 50 & 50 & 70 \
4 & 40 & 60 & 60 \
5 & 30 & 70 & 50 \
6 & 20 & 80 & 40\\hline
\end{array}$$
-Refer to Table 16.3.1.The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer.If production is left to the private market,the market price is

Accepted Answer

The answer of Use the table below to answer the...

Question 9

If the marginal private cost of producing one kilowatt of power in British Columbia equals five cents and the marginal social cost of each kilowatt equals nine cents,then the marginal external cost equals ________ per kilowatt.

Accepted Answer

The marginal external cost is the difference between the marginal social cost and the marginal private cost, which is nine cents minus five cents, equaling four cents.

Question 10

A private cost of production is a cost that is borne by the ________ of a good or service. A social cost of production is a cost that is ________.

Accepted Answer

A private cost of production is a cost that is directly borne by the producer of a good or service. A social cost of production includes both the private cost and any additional costs (externalities) borne by others who were not involved in the transaction.

Question 11

If the production of a good creates pollution,then the

Accepted Answer

When production creates pollution, it imposes costs on society in the form of negative externalities. The marginal private cost (MPC) curve only takes into account the private costs faced by the producer, while the marginal social cost (MSC) curve includes both the private costs and the costs imposed on society. As a result, the MSC curve lies above the MPC curve to account for the external costs. Therefore, choice B is the correct answer.

Question 12

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a subsidy is granted that generates an efficient quantity,then quantity produced is

Accepted Answer

The answer of Use the figure below to answer the...

Question 13

All of the following statements about emission charges are correct except

Accepted Answer

The answer of All of the following statements about emission...

Question 14

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.To promote an efficient quantity the government could grant a subsidy equal to

Accepted Answer

The answer of Use the figure below to answer the...

Question 15

When Good A is produced,pollution is also produced.When the marginal social cost of production of Good A equals marginal social benefit from Good A,then I.there is no pollution
II.resources are used efficiently

Accepted Answer

The answer of When Good A is produced,pollution is also...

Question 16

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is

Accepted Answer

The price in a private market is determined where the market supply curve intersects the marginal private benefit curve. In this case, it is at point B12, which corresponds to a price of P₂.

Question 17

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the quantity produced is

Accepted Answer

In a private market, the quantity produced is determined where the marginal private benefit equals the market supply curve, which is typically at Q2 in such diagrams.

Question 18

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a voucher is given to consumers that generates an efficient outcome,then consumers pay

Accepted Answer

The answer of Use the figure below to answer the...

Question 19

The marginal private benefit curve (MB)is a negatively-sloped straight line.If marginal external benefit decreases as output increases,the marginal social benefit curve is a negatively-sloped straight line

Accepted Answer

If the marginal external benefit decreases as output increases, the marginal social benefit curve will lie above the marginal private benefit curve. However, it also indicates that the marginal social benefit is less sensitive to output than the marginal private benefit because it is affected by the external benefit. Therefore, the marginal social benefit curve will be steeper than the marginal private benefit curve. Hence, option C is the correct choice.

Question 20

Use the figure below to answer the following questions.
  Figure 16.3.1
-Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then at the equilibrium quantity the marginal social benefit from consumption is

Accepted Answer

The answer of Use the figure below to answer the...

Quiz 16: Externalities

Producing paper creates pollution.There is no externality in the consumption of paper.The efficient quantity of paper produced occurs when the

Consider the production of pesticide that pollutes a lake used by a trout farmer.A marketable permit

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then

If the marginal private cost of producing one kilowatt of power in British Columbia equals five cents and the marginal social cost of each kilowatt equals nine cents,then the marginal external cost equals ________ per kilowatt.

A private cost of production is a cost that is borne by the of a good or service. A social cost of production is a cost that is .

If the production of a good creates pollution,then the

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a subsidy is granted that generates an efficient quantity,then quantity produced is

All of the following statements about emission charges are correct except

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.To promote an efficient quantity the government could grant a subsidy equal to

When Good A is produced,pollution is also produced.When the marginal social cost of production of Good A equals marginal social benefit from Good A,then I.there is no pollution II.resources are used efficiently

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the quantity produced is

Use the figure below to answer the following questions. Figure 16.3.1 -Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a voucher is given to consumers that generates an efficient outcome,then consumers pay

The marginal private benefit curve (MB) is a negatively-sloped straight line.If marginal external benefit decreases as output increases,the marginal social benefit curve is a negatively-sloped straight line