Question :
21) Ronald Coase was awarded the 1991 Nobel Prize in : 1387495
21) Ronald Coase was awarded the 1991 Nobel Prize in Economics primarily for addressing problems related to externalities. Which of the following describes Coase’s work?
A) Coase argued that government intervention is necessary to achieve economic efficiency in markets that are affected by externalities.
B) Coase proved that economic efficiency cannot be achieved in a market that is affected by positive or negative externalities.
C) Coase argued that under some circumstances, private solutions to the problems of externalities will occur.
D) Coase proved that a competitive market achieved a greater degree of economic efficiency than a non-competitive market when externalities occur.
22) Congress passed the Clean Air Act in 1970. Since this act was passed, emissions of the six main air pollutants
A) have fallen by more than one-half.
B) have increased significantly due to the growth of the U.S. economy.
C) cannot be measured since Congress failed to appropriate money to monitor the level of emissions.
D) have remained essentially constant, even though significant economic growth has occurred in the United States since 1970.
23) Kenneth Chay and Michael Greenstone examined the impact of reductions in air pollution since the passage of the Clean Air Act of 1970. Which of the following statements summarizes their findings?
A) The marginal benefit of reductions in air pollution was less than the marginal cost.
B) The marginal cost of reducing emissions of sulfur dioxide has increased over time as the marginal benefit of the reductions has increased.
C) The benefits of reducing the six main air pollutants in the two years following the Act greatly exceeded the costs.
D) In the two years following passage of the Act, fewer infants died than would have died if the Act had not been passed.
24) If electric utilities continually reduce their emissions of sulfur dioxide,
A) the utilities will eventually be forced to go out of business.
B) the marginal benefit of additional emissions will rise.
C) the marginal cost of further emissions will rise.
D) the total benefit of sulfur dioxide emissions will fall.
25) If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost,
A) further reductions will make society better off.
B) the marginal benefit will rise and the marginal cost will fall as further reductions are made.
C) economic efficiency will be achieved when emissions are reduced to zero.
D) private businesses, rather the consumers, should be made to pay for the cost of further reductions.
26) If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost,
A) further reductions will make society better off.
B) further reduction will make society worse off.
C) pollution taxes should be imposed on producers to pay for further reductions.
D) economic efficiency will be increased if further reductions are made.
27) According to Steven Cheung: “Pollination contracts usually include stipulations regarding the number and strength of …[bee] colonies, the rental fee per hive, the time of delivery…the protection of bees from pesticides, and the strategic placing of hives.” Cheung cites this as evidence that
A) the high costs of writing and enforcing complicated written agreements between owners of beehives and apple orchards prevents economic efficiency from being achieved in these markets.
B) government intervention is not always necessary to bring about an economically efficient number of apple trees and beehives.
C) government regulation of contracts between owners of beehives and apple orchards is necessary to bring about an economically efficient number of apple trees and beehives.
D) the beekeeping and apple growing businesses have become more complicated and costly over time due to the legal costs involved.
28) Steven Cheung examined the relationship between beekeepers and apple growers. Cheung noted that: “Pollination contracts usually include stipulations regarding the number and strength of … [bee] colonies, the rental fee per hive, the time of delivery…the protection of bees from pesticides, and the strategic placing of hives.” Cheung suggests that the relationship between beekeepers and apple growers is an example of
A) the Coase Theorem.
B) how excessive legal costs can prevent economic efficiency from being achieved.
C) negative externalities.
D) government intervention improving economic efficiency.
29) Which of the following statements about the economically efficient level of air pollution is correct?
A) The economically efficient level of pollution is zero.
B) The economically efficient level of pollution occurs where all social costs equal all social benefits.
C) The economically efficient level of pollution occurs where the marginal cost of pollution reduction equals the marginal social benefit of reduction.
D) The economically efficient level of pollution occurs where total benefits of pollution reduction are maximized.
30) The costs in time and other resources that parties incur in the process of facilitating an exchange of goods and services are called
A) enforcement costs.
B) implicit costs.
C) explicit costs.
D) transaction costs.
