Question :
61.Whennegativeexternalitiesarepresentinamarket,
a.producerswillbeaffectedbutconsumerswillnot.
b.producerswillsupplytoomuchoftheproduct.
c.demandwillbetoohigh.
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61.Whennegativeexternalitiesarepresentinamarket,
a.producerswillbeaffectedbutconsumerswillnot.
b.producerswillsupplytoomuchoftheproduct.
c.demandwillbetoohigh.
d.themarketwillstillmaximizetotalbenefits.
62.Whichofthefollowingwouldnotbeconsideredanegativeexternality?
a.Smelter,Inc.createssteelandpollution.
b.Yourfriendbuysanewpuppythatbarkseverynight.
c.Youhaveanadversereactiontoamedicationyourdoctorprescribedforyou.
d.Yourneighborplaysloudmusicthatyoudislikethroughstereospeakerssetuponhisdeck.
63.Supposethatbeefproducerscreateanegativeexternality.Whatistherelationshipbetweentheequilibriumquantityofbeefandthesociallyoptimalquantityofbeef?
a.Theyareequal.
b.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
c.Theequilibriumquantityislessthanthesociallyoptimalquantity.
d.Thereisnotenoughinformationtoanswerthequestion.
64.Supposethatcoalproducerscreateanegativeexternalityequalto$5pertonofcoal.Whatistherelationshipbetweentheequilibriumquantityofcoalandthesociallyoptimalquantityofcoal?
a.Theyareequal.
b.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
c.Theequilibriumquantityislessthanthesociallyoptimalquantity.
d.Thereisnotenoughinformationtoanswerthequestion.
65.Supposethatsmokingcreatesanegativeexternality.Ifthegovernmentdoesnotinterfereinthecigarettemarket,then
a.theequilibriumquantityofcigarettessmokedwillequalthesociallyoptimalquantityofcigarettessmoked.
b.theequilibriumquantityofcigarettessmokedwillbegreaterthanthesociallyoptimalquantityofcigarettessmoked.
c.theequilibriumquantityofcigarettessmokedwillbelessthanthesociallyoptimalquantityofcigarettessmoked.
d.Thereisnotenoughinformationtoanswerthequestion.
66.Supposethatafirmproduceselectricitybyburningcoal.Theproductionprocesscreatesanegativeexternalityofairpollution.Ifthefirmdoesnotinternalizethecostoftheexternality,itwillproducewhere
a.thevalueofelectricitytoconsumersequalstheprivatecostofproducingelectricity.
b.thevalueofelectricitytoconsumersequalsthesocialcostofproducingelectricity.
c.thecostoftheexternalityismaximized.
d.thetransactioncostsofprivatebargainingareminimized.
67.SupposethatanegativeexternalityiscreatedbytheproductionofgoodX.Whichofthefollowingstatementsiscorrect?
a.ThesocialcostofproducinggoodXincludestheprivatecostplusthecosttobystandersoftheexternality.
b.Theincreasedsocialcostcanbegraphedasadecreaseindemand.
c.Themarketequilibriumquantitywillbethesociallyoptimalquantityaslongasthegovernmentdoesnotinterfere.
d.Bothaandbarecorrect.
68.WhichofthefollowingisNOTanexampleofanegativeexternality?
a.airpollutionfromamanufacturingplant.
b.disruptedsleepfromaneighbor’sloudmusic.
c.anillnesscausedbysecondhandcigarettesmoke.
d.adecreaseinyourpropertyvaluefromneglectingyourlawnandgarden.
69.Apaperplantproduceswaterpollutionduringtheproductionprocess.Ifthegovernmentforcestheplanttointernalizethenegativeexternality,thenthe
a.supplycurveforpaperwouldshifttotheright.
b.supplycurveforpaperwouldshifttotheleft.
c.demandcurveforpaperwouldshifttotheright.
d.demandcurveforpaperwouldshifttotheleft.
Figure10-7
70.RefertoFigure10-7.Whichquantityrepresentsthesocialoptimumforthismarket?
a.Q1.
b.Q2.
c.Q3.
d.Q4.