Question :
41.Supposethatcandyproducerscreateapositiveexternalityequalto$1perpoundofcandy.Furthersupposethatthegovernmentoffersa$1-per-poundsubsidytotheproducers.Whatistherelationshipbetweentheequilibriumquantityandthesociallyopt : 1261393
41.Supposethatcandyproducerscreateapositiveexternalityequalto$1perpoundofcandy.Furthersupposethatthegovernmentoffersa$1-per-poundsubsidytotheproducers.Whatistherelationshipbetweentheequilibriumquantityandthesociallyoptimalquantityofcandy?
a.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
b.Theequilibriumquantityislessthanthesociallyoptimalquantity.
c.Theyareequal.
d.Thereisnotenoughinformationtoanswerthequestion.
42.Supposethatflushotscreateapositiveexternalityequalto$9pershot.Furthersupposethatthegovernmentoffersa$9-per-shotsubsidytoproducers.Whatistherelationshipbetweentheequilibriumquantityandthesociallyoptimalquantityofflushotsproduced?
a.Theyareequal.
b.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
c.Theequilibriumquantityislessthanthesociallyoptimalquantity.
d.Thereisnotenoughinformationtoanswerthequestion.
43.Supposethatflushotscreateapositiveexternalityequalto$8pershot.Furthersupposethatthegovernmentoffersa$6-per-shotsubsidytoproducers.Whatistherelationshipbetweentheequilibriumquantityandthesociallyoptimalquantityofflushotsproduced?
a.Theyareequal.
b.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
c.Theequilibriumquantityislessthanthesociallyoptimalquantity.
d.Thereisnotenoughinformationtoanswerthequestion.
44.Supposethatflushotscreateapositiveexternalityequalto$8pershot.Furthersupposethatthegovernmentoffersa$11-per-shotsubsidytoproducers.Whatistherelationshipbetweentheequilibriumquantityandthesociallyoptimalquantityofflushotsproduced?
a.Theyareequal.
b.Theequilibriumquantityisgreaterthanthesociallyoptimalquantity.
c.Theequilibriumquantityislessthanthesociallyoptimalquantity.
d.Thereisnotenoughinformationtoanswerthequestion.
45.Whichofthefollowingstatementsisnotcorrect?
a.Tradablepollutionpermitshaveanadvantageovercorrectivetaxesifthegovernmentisuncertainastotheoptimalsizeofthetaxnecessarytoreducepollutiontoaspecificlevel.
b.Bothcorrectivetaxesandtradablepollutionpermitsprovidemarket-basedincentivesforfirmstoreducepollution.
c.Correctivetaxessetthemaximumquantityofpollution,whereastradablepollutionpermitsfixthepriceofpollution.
d.Bothcorrectivetaxesandtradablepollutionpermitsreducethecostofenvironmentalprotectionandthusshouldincreasethepublic’sdemandforacleanenvironment.
Figure10-15
46.RefertoFigure10-15.Whichgraphillustratesapollutionpermitprogram?
a.theleftgraph
b.therightgraph
c.bothgraphs
d.neithergraph
47.RefertoFigure10-15.Whichgraphillustratesacorrectivetax?
a.theleftgraph
b.therightgraph
c.bothgraphs
d.neithergraph
48.RefertoFigure10-15.Which of the following isnotnecessaryinorderforthecorrectivetaxandpollutionpermittohaveequivalenteffects?
a.PBmustbeequivalenttothecorrectivetax.
b.QAmustbeequivalenttotheamountofpollutionallowedtothepollutionpermitholders.
c.Theequilibriumpriceandquantityofpollutionmustbethesameinbothgraphs.
d.Theamountofpollutionemittedbyeachfirmmustbethesame.
49.RefertoFigure10-15.The supply of pollutionpermits is
a.elasticandrepresentedbylineA.
b.inelasticandrepresentedbylineA.
c.elasticandrepresentedbylineF
d.inelasticandrepresentedbylineF.
50.Whichofthefollowingstatementsiscorrect?
a.Correctivetaxesareoftenpreferredoverdirectregulationbecausetheytypicallyreduceexternalitiesatalowercost.
b.Correctivetaxesdistorteconomicincentives.
c.Correctivetaxesareoftenpreferredoverdirectregulationbecausetheytypicallyreduceexternalitiesatafasterrate.
d.Bothaandbarecorrect.