Question : 81) The Coase theorem deals with the problem of pollution : 1226023

81) The Coase theorem deals with the problem of pollution by

A) giving the government regulatory power over polluters.

B) making all polluters stop polluting.

C) establishing and enforcing private property rights.

D) having the government take over ownership of all polluting processes.

E) allowing the government to set the proper emission charge.

82) If transactions costs are low, then assigning property rights in a market with external costs

i.increases the deadweight loss.

ii.means private transactions are efficient.

iii.means that only consumers must pay the external costs.

A) i only

B) ii only

C) ii and iii

D) i and iii

E) i and ii

83) Transactions costs are the

A) costs of using the Coase theorem.

B) opportunity costs of conducting a transaction.

C) external marginal costs of the externality.

D) reason why taxes cannot affect the inefficiency resulting from an external cost.

E) external costs when a firm pollutes.

84) 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

85) Three methods the government can use to cope with the external cost from pollution are

A) pollution taxes, subsidies, and outright bans.

B) pollution taxes, regulations, and subsidies.

C) marketable permits, pollution subsidies, and pollution taxes.

D) pollution charges, marketable permits, and pollution limits.

E) vouchers, pollution subsidies, and pollution taxes.

86) Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?

A) removing property rights

B) subsidizing production

C) marketable permits

D) lottery

E) vouchers

87) Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

A) 0 tons

B) 200 tons

C) 300 tons

D) more than 300 tons

E) None of the above answers is correct.

88) Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. If the government sets a pollution limit that achieves efficiency, how many tons of leather are produced?

A) 0 tons

B) 200 tons

C) 300 tons

D) more than 300 tons

E) more than 0 tons and less than 200 tons

89) Which of the following is true regarding pollution charges?

i.They force a polluter to pay a price for its pollution.

ii.They are based on the marginal external cost of pollution.

iii.The fee that produces the efficient amount of pollution is easily determined.

A) i only

B) i and ii

C) ii and iii

D) i, ii, and iii

E) i and iii

90) When using pollution charges to improve efficiency in a market with an external cost, regulators attempt to set the pollution charge equal to the

A) marginal social cost of production.

B) marginal external cost of production.

C) marginal private cost of production.

D) marginal private benefit of consumption.

E) marginal external benefit minus the marginal external cost.