In: Economics
QUESTION 19
Emission controls on automobiles are an example of a
a. |
policy to reduce congestion on urban freeways. |
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b. |
corrective tax. |
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c. |
command-and-control policy to increase social efficiency. |
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d. |
policy that reduces pollution by allocating resources through market mechanisms. |
4 points
QUESTION 20
A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x,
a. |
social value = private value = private cost < social cost. |
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b. |
social cost = private cost = private value = social value. |
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c. |
private cost < social cost = private value = social value. |
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d. |
social cost = private cost = private value < social value. |
4 points
QUESTION 21
When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to
a. |
externalize the actions of the buyers and sellers. |
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b. |
internalize the externality. |
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c. |
equalize private cost and external cost. |
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d. |
equalize private value and private cost. |
4 points
QUESTION 22
A corrective tax
a. |
can be used to internalize a negative externality. |
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b. |
imposed on sellers shifts the supply curve to the left. |
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c. |
imposed on buyers shifts the demand curve to the left. |
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d. |
All of the above are correct. |
4 points
QUESTION 23
The difference between social cost and private cost is a measure of the
a. |
cost incurred by the government when it intervenes in the market. |
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b. |
cost reduction when the negative externality is eliminated. |
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c. |
cost of an externality. |
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d. |
loss in profit to the seller as the result of a negative externality. |
4 points
QUESTION 24
When the government uses a command-and-control policy to solve an externality, it
a. |
is usually the most effective policy option available. |
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b. |
usually involves taxing the consumption of a commodity. |
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c. |
creates policies that directly regulate behavior. |
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d. |
typically refers to the Coase theorem to structure the policy. |
4 points
QUESTION 25
A negative externality will cause a private market to produce
a. |
less than the same market would produce in the presence of a positive externality. |
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b. |
more than is socially desirable. |
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c. |
less than is socially desirable. |
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d. |
exactly the quantity that is socially desirable. |
QUESTION 19
Emission controls on automobiles are an example of a command-and-control policy to increase social efficiency. (option c)
QUESTION 20
A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x, then social value = private value = private cost < social cost. (option A)
QUESTION 21
When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to internalize the externality. (option B)
QUESTION 22
A corrective tax can be used to internalize a negative externality. (option A)
QUESTION 23
The difference between social cost and private cost is a measure of the cost of an externality. (option C)
QUESTION 24
When the government uses a command-and-control policy to solve an externality, creates policies that directly regulate behavior. (option C)
QUESTION 25
A negative externality will cause a private market to produce more than is socially desirable. (option b)