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External benefits are the extra


A) benefits a consumer gets from consuming a good.
B) costs a producer creates in producing a good.
C) benefits that accrue to people other than the consumers.
D) costs a producer bears for producing a polluting good.
E) benefits a producer obtains for reducing production of a polluting good.

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-The figure above shows the market for steel,the production of which creates pollution. a.What point represents the equilibrium price and what point represents the equilibrium quantity in an unregulated,competitive market? b.What area represents the deadweight loss of the unregulated,competitive market outcome? c.What point represents the efficient quantity? d.If the output level in part (c)was achieved through the use of a government imposed tax,what price would consumers pay? What price would the producers receive? What distance represents the amount of the tax? e.If government successfully uses marketable permits to eliminate the external cost,what point represents how much output would be produced? -The figure above shows the market for steel,the production of which creates pollution. a.What point represents the equilibrium price and what point represents the equilibrium quantity in an unregulated,competitive market? b.What area represents the deadweight loss of the unregulated,competitive market outcome? c.What point represents the efficient quantity? d.If the output level in part (c)was achieved through the use of a government imposed tax,what price would consumers pay? What price would the producers receive? What distance represents the amount of the tax? e.If government successfully uses marketable permits to eliminate the external cost,what point represents how much output would be produced?

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a.The price is given by point c and the ...

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Why does the existence of an external benefit lead to the production of less than the efficient quantity?

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Buyers ignore the presence of an externa...

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If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?


A) The quantity supplied along the firm's supply curve increases.
B) The firm's demand curve shifts leftward.
C) The firm's supply curve shifts rightward.
D) The firm's supply curve shifts leftward.
E) Both the supply curve and the demand curve shift leftward.

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Private subsidies granted to producers affect


A) the supply side of the market by shifting the supply curve.
B) the demand side of the market by shifting the demand curve.
C) property rights.
D) transaction costs.
E) both the supply side of the market and the demand side because they shift both the supply curve and the demand curve.

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-The figure above shows the market for college education in the United States.If the government has a goal of enrolling the efficient number of students each year,the government should provide a voucher to students equaling ________. A) $16,000 B) $13,000 C) $11,000 D) $5,000 E) $7,000 -The figure above shows the market for college education in the United States.If the government has a goal of enrolling the efficient number of students each year,the government should provide a voucher to students equaling ________.


A) $16,000
B) $13,000
C) $11,000
D) $5,000
E) $7,000

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If there is no external cost,then marginal social cost


A) increases as output increases.
B) decreases as output increases.
C) is constant regardless of the level of output.
D) is unrelated to output levels.
E) first increases and then decreases as output increases.

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Which of the following is NOT an example of a good with an external cost?


A) electricity generation producing carbon dioxide emissions that contribute toward global warming
B) logging that pollutes a nearby river
C) Jess smoking near her non-smoking roommate
D) Ahmed working at a bank and getting a flu shot each fall
E) noise pollution from aircraft

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-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a pollution tax equal to the marginal external cost is imposed on gasoline,then the quantity of gasoline produced and consumed equals A) 0 gallons. B) 5 million gallons. C) 10 million gallons. D) 20 million gallons. E) None of the above answers is correct. -The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a pollution tax equal to the marginal external cost is imposed on gasoline,then the quantity of gasoline produced and consumed equals


A) 0 gallons.
B) 5 million gallons.
C) 10 million gallons.
D) 20 million gallons.
E) None of the above answers is correct.

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Why does government provide educational opportunities in the form of vouchers,private subsidies,and public provision?

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Education generates external benefits.Wi...

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Explain the difference between a negative production externality and a negative consumption externality.

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A negative production externality occurs...

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Which of the following is an example of a product that is made available through public provision? i.local police protection ii.public schools iii.local fire department


A) i only
B) i and ii
C) iii only
D) i and iii
E) i, ii, and iii

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-The figure above shows the market for annual influenza immunizations the United States.Area B is the A) gain in efficiency from the illustrated subsidy. B) remaining deadweight loss when there is the illustrated subsidy. C) deadweight loss when there is not the illustrated subsidy. D) equilibrium with the illustrated subsidy. E) loss in efficiency from the illustrated subsidy. -The figure above shows the market for annual influenza immunizations the United States.Area B is the


A) gain in efficiency from the illustrated subsidy.
B) remaining deadweight loss when there is the illustrated subsidy.
C) deadweight loss when there is not the illustrated subsidy.
D) equilibrium with the illustrated subsidy.
E) loss in efficiency from the illustrated subsidy.

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Which of the following is the best example of a transactions cost?


A) the value of the time spent negotiating a contract
B) the price of a new set of tires
C) the cost associated with producing a golf club
D) the price of labor and materials used to produce a house
E) the price of food

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The figure above shows the demand for college education (D) , the marginal social benefit of college education (MSB) , and the marginal cost of the private schools (MC) . -Based on the figure above,when the market is unregulated and is in equilibrium,the deadweight loss is A) $86.25 million per year. B) $56.25 million per year. C) $48.75 million per year. D) $37.50 million per year. E) zero. The figure above shows the demand for college education (D) , the marginal social benefit of college education (MSB) , and the marginal cost of the private schools (MC) . -Based on the figure above,when the market is unregulated and is in equilibrium,the deadweight loss is


A) $86.25 million per year.
B) $56.25 million per year.
C) $48.75 million per year.
D) $37.50 million per year.
E) zero.

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


A) the marginal cost.
B) represented by the demand curve.
C) represented by the supply curve.
D) the marginal external cost.
E) the marginal social cost.

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-The figure above shows the market for annual influenza immunizations the United States.Area A is the A) total deadweight loss when there is not the illustrated subsidy. B) remaining deadweight loss when there is the illustrated subsidy. C) gain in efficiency from the illustrated subsidy. D) loss in efficiency from the illustrated subsidy. E) consumer surplus with the illustrated subsidy. -The figure above shows the market for annual influenza immunizations the United States.Area A is the


A) total deadweight loss when there is not the illustrated subsidy.
B) remaining deadweight loss when there is the illustrated subsidy.
C) gain in efficiency from the illustrated subsidy.
D) loss in efficiency from the illustrated subsidy.
E) consumer surplus with the illustrated subsidy.

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Marginal social benefit equals


A) marginal external benefit.
B) marginal private benefit.
C) marginal private benefit minus marginal external benefit.
D) marginal private benefit plus marginal external benefit.
E) marginal external benefit minus marginal private benefit.

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The government can overcome the inefficiency created by a good with an external benefit by using


A) public provision.
B) marketable permits.
C) taxes.
D) emission charges.
E) None of the above answers is correct.

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In an unregulated market with an external benefit,the


A) quantity produced is greater than the efficient quantity.
B) price charged is too high for efficiency.
C) quantity produced is less than the efficient quantity.
D) producer is causing pollution but not paying for it.
E) government might impose a tax to help move the market toward the efficient amount of production.

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