Question : 100) The figure above shows the market for the chemical : 1241040

100) The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency?

A) $2 per pound

B) $3 per pound

C) $4 per pound

D) $1 per pound.

E) None of the above answers is correct.

101) The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the above figure. What quantity is produced after the pollution tax is imposed?

A) zero pounds

B) 80 million pounds

C) 160 million pounds

D) more than 160 million pounds

E) more than 80 million pounds and less than 160 million pounds.

102) The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the figure. How much tax revenue does the government collect?

A) $640 million

B) $320 million

C) $240 million

D) more than $640 million

E) zero, because the government has taxed the firms out of business.

103) The figure above shows a tax imposed on a good with an external cost. The area of the rectangle abcd equals

A) the MSB.

B) the total tax revenue collected by the government.

C) the amount of pollution tax per ton.

D) the MC.

E) the deadweight loss.

104) The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. The marginal external cost of producing 200 billion kilowatt hours per day is ________ per kilowatt.

A) 0¢

B) 10¢

C) 20¢

D) 15¢

E) 5¢

105) The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the market is competitive and unregulated, the equilibrium price is ________ per kilowatt hour and the equilibrium quantity is ________ billion kilowatt hours per day.

A) 10¢; 200

B) 15¢; 150

C) 20¢; 200

D) 20¢; 100

E) 7.5¢; 150

106) The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the market is competitive and unregulated, the equilibrium quantity is ________ billion kilowatt hours per day and the efficient quantity is ________ billion kilowatt hours per day

A) 150; 200

B) 200; 150

C) 0; 150

D) 250; 0

E) 150; 150

107) The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the Coase theorem can be used in this market, output equals ________ kilowatt hours per day.

A) 0

B) 150 billion

C) 200 billion

D) 100 billion

E) more than 200 billion

108) The figure above shows the marginal social cost curve of generating electricity, the marginal private cost curve, and the demand curve. If the government imposes a pollution tax to achieve the efficient level of production, the tax equals ________ per kilowatt hour.

A) 0¢

B) 7.5¢

C) 10¢

D) 15¢

E) 2.5¢

109) What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?

A) insufficient legal power to enforce the controls

B) obtaining enough data to determine how much the tax or pollution charge will be

C) In some situations, there is no known way to control the external costs.

D) political lobbying and voter disagreement

E) The Coase theorem points out that taxes and pollution charges work only in the short run and not in the long run.