An industry with producti

An industry with producti

An industry with production that generates external costs produces a quantity of output that is: A. smaller than the socially optimal quantity. B. socially optimal if a specific subsidy is given to buyers. C. socially optimal. D. larger than the socially optimal quantity. 2. When farmers raise pigs, there are a number of external costs. In particular, raising pigs generates methane gas. If the marginal external cost is $100 per pig and the government imposes a tax of $200 per pig, then at the equilibrium price and quantity of pigs: A. the price will be less than the marginal social cost. B. the price will be less than the marginal cost to pig farmers. C. too few pigs will be raised. D. the price will be less than the marginal social benefit.3. Which of the following best describes a negative externality? A. Your neighbor has a pool and has given you an open invitation to come over and swim. B. Your neighbor loves to bake bread and always brings you a loaf fresh and hot from the oven. C. Your neighbor has invested in beautiful landscaping, increasing the value of all houses on the block. D. Your neighbor has an ornamental pond that breeds mosquitoes. 4. Automobile emissions generate pollution and cause higher costs and discomfort to residents of a city. In this case: A. too little of society’s resources is being used to operate automobiles. B. the externality can be internalized into the market by granting a specific subsidy to drivers. C. there is an external benefit to society from operating automobiles. D. the externality can be internalized into the market by imposing a specific tax on drivers.5. The marginal benefit received from pollution is equal to its marginal cost in the market for highly polished glass. In this situation: A. firms in the market produce too much pollution. B. firms in the market produce too little pollution. C. society’s well-being can be improved if the quantity of pollution decreases. D. firms in the market produce the socially optimal level of pollution. 6. If the marginal benefit received from pollution is less than its marginal cost, then: A. society’s well-being can be improved if the quantity of pollution increases. B. society’s well-being can be improved if the quantity of pollution decreases. C. the market is producing too little pollution. D. society has achieved its socially optimal level of pollution.7. Activities that generate external costs will likely be carried out at levels that ________ those that would be efficient. A. are less than B. compete with C. are equal to D. exceed 8. Whenever human activity generates a concentration of a substance in the environment sufficient to cause harm to people, it is called: A. pollution. B. a free good. C. a result of human greed. D. an external shock.9. In the absence of government action, polluters will pollute up to the point at which the marginal social benefit of pollution is: A. greater than the marginal social cost of pollution. B. equal to the marginal social cost of pollution. C. maximized. D. zero. 10. The marginal benefit received from pollution is less than its marginal cost in the market for highly polished glass. In this situation: A.society’s well being cannot be improved by changing the quantitiy of pollution. society’s well-being cannot be improved by changing the quantity of pollution. B.firms in the market produce too little pollution firms in the market produce too little pollution. C.firms in the market produce the socially optimal level of pollution firms in the market produce the socially optimal level of pollution. D.firms in the market poroduce too much pollution     11. Which of the following is an example of an activity generating a negative externality? A. The only two coffee shops in town conspire to raise prices. B. You buy a new car, then discover it needs a new transmission. C. Your next-door neighbor mows the lawn at 6 A.M. D. After Jane bought health insurance, she began racing motorcycles on the weekends. 12. Oscar owns a meat processing plant whose unpleasant odors waft across the city. Because the production of processed meat provides a negative externality to the community, at the market equilibrium quantity, the marginal social: A. benefit of processed meat is lower than the market price. B. cost of processed meat exceeds the market price. C. cost of processed meat is lower than the market price. D. benefit of processed meat exceeds the market price.A. producer’s supply curve. B. marginal external cost. C. additional cost of producing an additional good. D. marginal external benefit. 14. The marginal cost of pollution emissions ________ as the quantity of pollution emissions ________. A. increases; decreases B. decreases; increases C. increases; increases D. remains constant; decreasesA. external cost. B. specific tax. C. quasi-public good. D. external benefit. 16. Since the 1960s, power plants have taken actions, such as switching to low-sulfur coal and installing scrubbers in their smokestacks, which have significantly reduced the problem of acid rain. Power plants took these actions mainly because: A. of concern about the environment. B. government policies provided power companies with incentives to take these actions. C. of concern about the environment and because government policies provided power companies with incentives to take these actions. D. large firms in the United States have a history of being ?good citizens? and doing what is best for society, even if this reduces their profits somewhat.A. the price will be less than the marginal social cost the price will be less than the marginal social cost. B.the price will be less than the marginal cost to pig farmers the price will be less than the marginal cost to pig farmers. C.too few pigs will be raised too few pigs will be raised. D.the price will be less than the marginal benefit     18. Oscar owns a meat processing plant whose unpleasant odors waft across the city. Because the production of processed meat provides a negative externality to the community, the government should: A. subsidize Oscar’s production of processed meat, since the market quantity is greater than the socially optimal quantity. B. impose a tax on Oscar’s production of processed meat, since the market quantity is greater than the socially optimal quantity. C. impose a tax on Oscar’s production of processed meat, since the market quantity is less than the socially optimal quantity. D. subsidize Oscar’s production of processed meat, since the market quantity is less than the socially optimal quantity.A. too little of society’s resources is being used to produce copper. B. too much of society’s resources is being used to produce copper. C. there is an external benefit to society from copper production. D. the optimal amount of society’s resources is being used to produce copper. 20. Suppose the production of DVDs generates sulfur dioxide, an air pollutant. Then the market price for DVDs: A. equals the marginal cost to society of producing DVDs. B. is less than the marginal cost to society of producing DVDs. C. is more than the marginal cost to society of producing DVDs. D. may be more than, less than, or equal to the marginal cost to society of producing DVDs.A. pollution reduces the social cost of production. B. most businesses just don’t care about the environment. C. in the process of producing the goods and services we enjoy, pollution occurs. D. consumers want goods and services at the lowest prices no matter what other costs may be involved. 22. According to the Coase theorem, the private market can achieve an efficient outcome: A. only if the property right to clean air is assigned to the polluter. B. only if the property right to clean air is assigned to the party harmed by pollution. C. as long as the enforcement of property rights costs less than the marginal benefit of emissions. D. if bargaining costs are low.A. by which the marginal social cost curve is lower than the supply curve. B. at which the marginal social benefit curve intersects the demand curve. C. by which the marginal social benefit curve is higher than the demand curve. D. by which the marginal social cost curve is higher than the supply curve. 24. A negative externality: A. equals the opportunity cost minus the social costs. B. is any cost above the economic cost. C. equals the social cost plus the firm’s private cost. D. is an uncompensated cost imposed by an individual or firm on others.A. a technology spillover. B. a network externality. C. a Pigouvian tax. D. the Coase theorem. Answers are notated by yellow highlighting.Thanks in advance! the price will be less than the marginal benefit.     firms in the market produce too much pollution.

%d bloggers like this: