A. There is under-consumption in the free market
B. There is over consumption in the free market
C. The government may tax to decrease production
D. Society could be made off it less was produced
Related Mcqs:
- Suppose an industry emits a negative externality such a pollution and the possible methods to internalize the externality are command-and-control policies, pigovian taxes, and tradable pollution permits. If economists were to rank these methods for internalizing a negative externality based on efficiency ease of implementation and the incentive for the industry to further reduce pollution in the future, they would probably rank them in the following order (from most favored to least favored) ?
A. Pigouvian taxes, command-and-control policies, tradable pollution permits.
B. tradable pollution permits, Pigouvian taxes, command-and-control policies
C. tradable pollution permits command-and-control policies, Pigovian taxes.
D. command-and-control policies, tradable pollution permits, Pigovian taxes.
E. They would all rank equally high because the same result can be obtained from any one of the policies - When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?
A. there are too many firms in the market and market efficiency could be increased if firms exited the market
B. the number of firms in the market is optimal and the market is efficient
C. There are too few firms in the market and market efficiency could be be increased with additional entry
D. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly. - A positive externality occurs when ?
A. The social marginal costs are higher than the private marginals costs
B. A product is not provided in the free market
C. The social marginal cost equal the social marginal benefit
D. The social marginal benefits are higher than the private marginal benefits - A positive externality affects market efficiency in a manner similar to a ?
A. rival good
B. public good
C. private good
D. common resource - A positive externality generates ?
A. a social cost curve that is above the supply curve (private cost curve) for a good
B. none of these answers
C. a social value curve that is above the demand curve (private value curve) for good
D. a social value curve that is below the demand curve (private value curve) for a good - A positive externality (that has not been internalized) caused the ?
A. equilibrium quantity to exceed the optimal quantity
B. equilibrium quantity to equal the optimal quantity
C. optimal quantity to exceed the equilibrium quantity
D. equilibrium quantity to be either above or below the optimal quantity - To internalize a positive externality an appropriate public policy response would be to ?
A. ban the good creating the externality
B. tax the good
C. subsidize the good
D. have the government produce the good until the value of an additional unit is zero - Which of the following expenditures to enhance productivity is most likely to emit a positive externality ?
A. Megabank buys a new computer
B. Naila pays her university tuition fees.
C. OGDC leases a new oil field
D. Indus Motors buys a new drill press - The effect of a tax to offset a negative externality will be to ____ price and ______ quantity?
A. reduce , reduce
B. increase, increase
C. increase, reduce
D. reduce, increase - Which of the following is not considered a transaction cost incurred by parties in the process of contracting to eliminate a pollution externality ?
A. costs incurred due to lawyers’ fees
B. costs incurred to reduce the pollution
C. costs incurred to enforce the agreement
D. costs incurred due to a large number of parties affected by the externality
E. All of these answers are considered transaction costs
