en 10In some cases, pollution permits may be better than a Pigovian tax becauseedSelect one:out ofa. pollution permits allow for a market solution, while a Pigovian tax does notO b. pollution permits generate more revenue for the government than a pigovian taxc. pollution permits are never preferred over a Pigovian taxO d. the government can set a maximum level of pollution using permits on 7When externalities exist, buyers and sellersredSelect one:d out ofa. neglect the external effects of their actions and the market equilibrium is efficientb. do not neglect the external effects of their actions and the market equilibrium is efficientonc. neglect the external effects of their actions and the market equilibrium is not efficientO d. do not neglect the external effects of their actions and the market equilibrium is not efficienton 8A positive consumption externality will cause a market toredSelect one:d out ofa. produce less than is socially desirableO b. produce more than is socially desirableonc. produce more than is market optimalO d. produce less than is market optimalon 9If only a few people are affected by an externalityredSelect one:d out ofa. then it is likely that Pigovian taxes will provide the most efficient solution to the externalityO b. then it is likely that command and control regulation will provide the most efficient solution to the externalityonc. then it is more likely that a private solution to the inefficiency could occurd. then it is likely that a private solution will be very difficult to negotiate

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In some cases, pollution permits may be better than a Pigovian tax because Select one: a. pollution permits allow for a market solution, while a Pigovian tax does not b. pollution permits generate more revenue for the government than a pigovian tax c. pollution permits are never preferred over a Pigovian tax d. the government can set a maximum level of pollution using permits

In some cases, pollution permits may be better than a Pigovian tax because Select one: a. pollution permits allow for a market solution, while a Pigovian tax does not b. pollution permits generate more revenue for the government than a pigovian tax c. pollution permits are never preferred over a Pigovian tax d. the government can set a maximum level of pollution using permits

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

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Similar questions

Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Do market demand curves reflect positive externalities? Why or why not?
Give an example of a positive externality and an example of a negative externality.
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel efficient cars are the same as the marginal social benefits. Discuss one wags.r that the government cans ï¬‚y to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is flying to affect production through costs, net benefits.
Identify the following situations as an example of a negative or a positive externality: You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. Your neighbor paints his house a hideous color. Investments in private education raise your countrys standard of living. Trash dumped upstream flows downstream right past your home. Your roommate is a smoker, but you are a nonsmoker.