Question 1

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the above figure. What quantity is produced after the pollution tax is imposed?

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 2

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the market is competitive and unregulated, the equilibrium quantity is ________ billions of kilowatt hours per day and the efficient quantity is ________ billion kilowatt hours per day

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Question 3

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency?

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 4

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Accepted Answer

The cost of producing an additional unit of a good or service that falls on people other than the producer is known as marginal external cost. This cost is not included in the producer's internal cost but is rather imposed on the external environment. Therefore, the correct option is D, i.e., the marginal external cost.

Question 5

Cap-and-trade refers to

Accepted Answer

Cap-and-trade refers to a system where a cap is placed on the amount of emissions that can be released into the environment, and permits are issued to companies that allow them to emit a certain amount. Companies can then trade these permits among themselves, incentivizing them to reduce their emissions and potentially generating revenue for companies that are able to reduce their emissions below the cap.

Question 6

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

Accepted Answer

The answer of 
-The figure above illustrates the gasoline market....

Question 7

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

Accepted Answer

The Coase theorem suggests that if there are no transaction costs, parties can negotiate to solve externalities on their own, leading to an efficient outcome. In this context, the efficient outcome is where the marginal social cost curve intersects the demand curve, which is at 150 billion kilowatt hours per day.

Question 8

Which of the following best describes an externality?

Accepted Answer

An externality is an effect of a transaction that is felt by someone other than the buyer or seller. It can be positive or negative and is not taken into account in the market price of the good or service.

Question 9

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

Accepted Answer

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the marginal private cost.

Question 10

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the figure. How much tax revenue does the government collect?

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 11

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution. If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution, then

Accepted Answer

The answer of Firm A and Firm B emit 300...

Question 12

-The figure above shows a tax imposed on a good with an external cost. The area of the rectangle abcd equals

Accepted Answer

The area of the rectangle abcd represents the total tax revenue collected by the government, as it is the product of the tax imposed per unit (height of the rectangle) and the quantity of the good sold (width of the rectangle).

Question 13

Cost effective technologies to reduce pollution are most likely to result from

Accepted Answer

Marketable pollution permits create a market where companies can buy and sell the right to pollute up to a predetermined limit. This creates an incentive for companies to reduce their pollution levels below their allotted limit and sell their unused permits, providing a financial benefit. In turn, this incentivizes companies to search for and develop cost-effective technologies that can help them reduce their pollution levels. Therefore, marketable pollution permits are most likely to result in cost-effective technologies that reduce pollution.

Question 14

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Question 15

Issuing marketable permits to firms that produce a product with external costs will give the firms the incentive to

Accepted Answer

Issuing marketable permits to firms with external costs gives them an incentive to reduce their emissions or pollution levels, as they can then sell any unused permits to other firms who need to emit. This creates a market for pollution permits and encourages firms to efficiently manage their emissions. Option A, C, D, and E are not desirable outcomes and are unlikely to occur.

Question 16

A problem with pollution charges or taxes as a solution to pollution is that

Accepted Answer

The necessary information about the amount and type of pollutants being released by a given industry is often difficult and costly to obtain, making it difficult to accurately calculate appropriate pollution charges or taxes.

Question 17

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the market is competitive and unregulated, the equilibrium price is ________ per kilowatt hour and the equilibrium quantity is ________ billion kilowatt hours per day.

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Question 18

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

Accepted Answer

The answer of What is the biggest problem of using...

Question 19

Which of the following is an example of an activity that creates an external cost?
I. a smoker emitting second-hand smoke
Ii. sulfur emitting from a smoke stack
Iii. throwing garbage on the roadside

Accepted Answer

All three activities (i. a smoker emitting second-hand smoke, ii. sulfur emitting from a smoke stack, iii. throwing garbage on the roadside) create external costs. These costs are borne by others in society or the environment, not by the individuals or entities directly involved in the activities.

Question 20

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.

Accepted Answer

The answer of 
-The figure above shows the marginal social...

Quiz 9: Externalities: Pollution, Education, and Health Care

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the above figure. What quantity is produced after the pollution tax is imposed?

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency?

The cost of producing an additional unit of a good or service that falls on people other than the producer is

Cap-and-trade refers to

-The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

Which of the following best describes an externality?

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

-The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the figure. How much tax revenue does the government collect?

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution. If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution, then

-The figure above shows a tax imposed on a good with an external cost. The area of the rectangle abcd equals

Cost effective technologies to reduce pollution are most likely to result from

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

Issuing marketable permits to firms that produce a product with external costs will give the firms the incentive to

A problem with pollution charges or taxes as a solution to pollution is that

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the market is competitive and unregulated, the equilibrium price is per kilowatt hour and the equilibrium quantity is billion kilowatt hours per day.

What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

Which of the following is an example of an activity that creates an external cost? I. a smoker emitting second-hand smoke Ii. sulfur emitting from a smoke stack Iii. throwing garbage on the roadside

-The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.