Question 1

When the production of a good has an external cost, the

Accepted Answer

A)   marginal social cost curve lies below the marginal private cost curve.
B)   marginal social benefit curve lies above the marginal private benefit curve.
C)   equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit.
D)   equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.E) C) and D)
F) B) and D)

Question 2

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?

Accepted Answer

A)   0 tons
B)   2 tons
C)   4 tons
D)   8 tonsE) B) and C)
F) All of the above

Question 3

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is ________.

Accepted Answer

A)   0 tons per week
B)   400 tons per week
C)   300 tons per week
D)   None of the above answers is correct.E) B) and D)
F) None of the above

Question 4

Let MC be the marginal private cost per megawatt hour (Mwh)  of producing electricity using coal. Let MSC be the marginal social cost per Mwh and T be the tax per Mwh. To achieve efficiency, the tax should be set so that

Accepted Answer

A)   MC = MSC + T.
B)   MSC = MC + T.
C)   MC + MSC = T
D)   MC = T.E) B) and C)
F) A) and B)

Exam 17: Externalities and the Environment

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?

Correct Answer
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Let MC be the marginal private cost per megawatt hour (Mwh) of producing electricity using coal. Let MSC be the marginal social cost per Mwh and T be the tax per Mwh. To achieve efficiency, the tax should be set so that

Correct Answer
verified

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is ________.

Correct Answer
verified

When the production of a good has an external cost, the

Correct Answer
verified

Exam 17: Externalities and the Environment

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?

Correct AnswerverifiedShow Answer

Let MC be the marginal private cost per megawatt hour (Mwh) of producing electricity using coal. Let MSC be the marginal social cost per Mwh and T be the tax per Mwh. To achieve efficiency, the tax should be set so that

Correct AnswerverifiedShow Answer

-The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is ________.

Correct AnswerverifiedShow Answer

When the production of a good has an external cost, the

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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