Question :
51.Whenthesocialcostcurveisaboveaproduct’ssupplycurve,
a.thegovernmenthasintervenedinthemarket.
b.anegativeexternalityexistsinthemarket.
c.apositiveexternalityexistsinth : 1261374
51.Whenthesocialcostcurveisaboveaproduct’ssupplycurve,
a.thegovernmenthasintervenedinthemarket.
b.anegativeexternalityexistsinthemarket.
c.apositiveexternalityexistsinthemarket.
d.thedistributionofresourcesisunfair.
52.Supposethegovernmentimposesataxinacertainmarketinordertointernalizeanexternality.This typeof policyisbasedonwhichoftheTenPrinciplesofEconomics?
a.Peoplefacetrade-offs.
b.Peoplerespondtoincentives.
c.Marketsareusuallyagoodwaytoorganizeeconomicactivity.
d.Thecostofsomethingiswhatyougiveuptogetit.
53.Whenapolicysucceedsingivingbuyersandsellersinamarketanincentivetotakeintoaccounttheexternaleffectsoftheiractions,thepolicyissaidto
a.equalizeprivatevalueandprivatecost.
b.equalizeprivatecostandexternalcost.
c.externalizetheactionsofthebuyersandsellers.
d.internalizetheexternality.
54.Supposethatasteelfactoryemitsacertainamountofairpollution,whichconstitutesanegativeexternality.Ifthemarketdoesnotinternalizetheexternality,
a.thesupplycurvewouldadequatelyreflectthemarginalsocialcostofproduction.
b.consumerswillberequiredtopayahigherpriceforsteelthantheywouldhaveiftheexternalitywereinternalized.
c.themarketequilibriumquantitywillnotbethesociallyoptimalquantity.
d.producerswillproducelesssteelthantheyotherwisewouldiftheexternalitywereinternalized.
55.Whenproducersoperateinamarketcharacterizedbynegativeexternalities,ataxthatforcesthemtointernalizetheexternalitywill
a.givesellerstheincentivetoaccountfortheexternaleffectsoftheiractions.
b.increasedemand.
c.increasetheamountofthecommodityexchangedinmarketequilibrium.
d.restricttheproducers’abilitytotakethecostsoftheexternalityintoaccountwhendecidinghowmuchtosupply.
56.WhenMoniquedrivestoworkeverymorning,shedrivesonacongestedhighway.WhatMoniquedoesnotrealizeisthatwhensheentersthehighwayeachmorningsheincreasesthetraveltimeofallotherdriversonthehighway.
a.increasesthesocialcostabovetheprivatecost.
b.lowersthesocialcostbelowtheprivatecost.
c.increasesthesocialvalueabovetheprivatebenefit.
d.decreasesthesocialvaluebelowtheprivatebenefit.
57.An optimaltaxonpollution wouldresultinwhichof thefollowing?
a.Producerswillchoosenottoproduceanypollution.
b.Producerswillinternalizethecostofthepollution.
c.Producerswillmaximizeproduction.
d.Thevaluetoconsumersatmarketequilibriumwillexceedthesocialcostofproduction.
58.Whichofthefollowingstatementsiscorrect?
a.Internalizinganegativeexternalitywillcauseanindustrytodecreasethequantityitsuppliestothemarketanddecreasethepriceofthegoodproduced.
b.Internalizinganegativeexternalitywillcauseanindustrytodecreasethequantityitsuppliestothemarketandincreasethepriceofthegoodproduced.
c.Internalizinganegativeexternalitywillcauseanindustrytoincreasethequantityitsuppliestothemarketanddecreasethepriceofthegoodproduced.
d.Internalizinganegativeexternalitywillcauseanindustrytoincreasethequantityitsuppliestothemarketandincreasethepriceofthegoodproduced.
59.Anegativeexternalitywillcauseaprivatemarkettoproduce
a.lessthanissociallydesirable.
b.morethanissociallydesirable.
c.exactlythequantitythatissociallydesirable.
d.lessthanthesamemarketwouldproduceinthepresenceofapositiveexternality.
60.Privatemarketsfailtoreachasociallyoptimalequilibriumwhennegativeexternalitiesarepresentbecause
a.socialcostsequalprivatecostsattheprivatemarketsolution.
b.privatecostsexceedsocialcostsattheprivatemarketsolution.
c.socialcostsexceedprivatecostsattheprivatemarketsolution.
d.theyinternalizeexternalities.