The problem with externalities is essentially one of OA. the failure of the market to solve social problems. OB. the inability of a firm in an industry characterized by increasing returns to scale to make positive profits if it sets price equal to marginal cost. OC. a failure of the market to exclude the scarce resources from public use. OD. a discrepancy between private and social costs. OE. asymmetric information.

The problem with externalities is essentially one of OA. the failure of the market to solve social problems. OB. the inability of a firm in an industry characterized by increasing returns to scale to make positive profits if it sets price equal to marginal cost. OC. a failure of the market to exclude the scarce resources from public use. OD. a discrepancy between private and social costs. OE. asymmetric information.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

See similar textbooks

Similar questions

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?
Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.
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?
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
Do market demand curves reflect positive externalities? Why or why not?
Which of the following is not a solution to the problem of negative externalities due to pollution? a. Levy pollution taxes. O b. Reward the production of these products through subsidies. Oc. Create a law protecting the environment. Od. Increase the cost of polluting equipment. k
Determine the type of market failure represented by the scenario below: Buying a used appliance on Ebay Select one: O a. public good O b. tragedy of the commons O . asymmetric information O d. negative externality O e. positive externality
Determine the type of market failure represented by the scenario below. Buying a used appliance on Ebay Select one: O a. negative externality Ob. public good Oc positive externality O d. tragedy of the commons e. asymmetric information
An increase in globalization has lead to an increase in pollution, and this is a problem because pollution is seen to be the classic example of a This is a that individuals impose on others but do not pay for. O negative externality, cost O possitive externality, benefit O negative externality, benefit O possitive externality, cost
For a product with external benefits like vaccines (positive externality),which of the following is true?Select one: Oa. The market equilibrium results in too much of the good compared to what is optimalOb. The market equilibrium results in too little of the good compared to what is optimal.Oc. The market will not provide the good; it must be publicly funded.O d. Large economies of scale work as a barrier to firm entry.
A positive externality causes Select one: O a. the marginal social benefit to be equal to the marginal private cost of the last unit produced. b. the marginal social benefit to be less than the marginal private cost of the last unit produced. c. the marginal private benefit to exceed the marginal social cost of the last unit produced. d. the marginal social benefit to exceed the marginal private cost of the last unit produced.