51.Thatsomefirmsareengagedinmorethanonetypeofbusinessisexplained,insomecases,by
a.moralinjunctionssuchastheGoldenRule.
b.theexistenceofcharitableorganizations.
c.governmentregulationsthatdiscouragetheinternalizationofexternalities.
d.thefactthattheinternalizationofexternalitiessometimescoincideswiththeself-interestoftherelevantparties.
52.TheCoasetheoremassertsthat,inthepresenceofexternalities,
a.privateeconomicactorssometimescanreachabargainthatproducesanefficientoutcome.
b.privateeconomicactorsalwayscanreachabargainthatmakeseveryonebetteroff.
c.privatesolutionscannotbeveryeffective.
d.correctivetaxescannotbeveryeffective.
53.Whenthegovernmentreducesmyincometaxby$0.30forevery$1.00thatIcontributetoacharity,thegovernmentiseffectively
a.alleviatingthenegativeexternalitiesthatareassociatedwithcharitablegiving.
b.imposinganegativeexternalityonthosewhodonotpayincometaxes.
c.encouragingaprivatesolutiontoapositive-externalityproblem.
d.encouragingaprivatesolutiontoanegative-externalityproblem.
54.Whenaparticularnegativeexternalityaffectsaverylargenumberofpeople,itislikelythat
a.governmentwillnotfinditworthwhiletoimposeacorrectivetax.
b.privatesolutionstotheproblemwilldominateanyattemptbygovernmenttoalleviatetheproblem.
c.thesolutiontoexternalitiessuggestedbytheCoasetheoremwillworkverywell.
d.thesolutiontoexternalitiessuggestedbytheCoasetheoremwillnotwork.
55.TheCoasetheoremassertsthat,ifexternalitiesarepresentandifprivatepartiescanbargainovertheallocationofresourcesatnocost,then
a.theprivatemarketwillreachanequilibriuminwhichresourcesareallocatedinefficiently.
b.theprivatemarketwillreachanequilibriuminwhichresourcesareallocatedefficiently.
c.theprivatemarketcannotreachanequilibrium.
d.amixtureofcorrectivetaxesandsubsidiesisnecessaryforasociallyoptimalequilibrium.
56.WhichofthefollowingstatementsabouttheCoasetheoremistrue?
a.UnderlyingtheresultsoftheCoasetheoremistheideathatprivatepartiescanbargainwithoutcostovertheallocationofresources.
b.TheCoasetheoremassertsthatprivatesolutionstoexternalitiesinvariablyleadtoinefficientallocationsofresources.
c.TheCoasetheoremappliestonegativeexternalities,butnottopositiveexternalities.
d.Alloftheabovearecorrect.
57.TheCoasetheoremassertsthattheprivatemarketwillalwayssolvetheproblemofexternalitiesandallocateresourcesefficiently
a.evenifprivatepartiesexperiencesubstantialcostsofbargaining.
b.eveniftheinitialdistributionoflegalrightsisskewedinfavorofsomeprivatepartiesoverothers.
c.onlywhenthereisalargenumberofprivatepartiesthatengageinbargaining.
d.Alloftheabovearecorrect.
58.Byallowinganincome-taxdeductionforcharitablecontributions,thegovernment
a.encouragesaprivatesolutiontoaparticularpositive-externalityproblem.
b.discouragesaprivatesolutiontoaparticularpositive-externalityproblem.
c.encouragesaprivatesolutiontoaparticularnegative-externalityproblem.
d.discouragesaprivatesolutiontoaparticularnegative-externalityproblem.
59.Whenthegovernmentusesacommand-and-controlpolicytosolveanexternality,it
a.isusuallythemosteffectivepolicyoptionavailable.
b.createspoliciesthatdirectlyregulatebehavior.
c.usuallyinvolvestaxingtheconsumptionofacommodity.
d.typicallyreferstotheCoasetheoremtostructurethepolicy.
60.Alocalmanufacturingplantthatemittedsulfurdioxidewasforcedtostopproductionbecauseitdidnotcomplywithlocalcleanairstandards.Thisdecisionprovidesanexampleof
a.adirectregulationofanexternality.
b.correctivetaxes.
c.aCoasetheoremsolutiontoanexternality.
d.themisuseofasubsidy.
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