Question : 81) Transactions costs the A) costs of using the Coase theorem. B) : 1238620

 

81) Transactions costs are the

A) costs of using the Coase theorem.

B) opportunity costs of conducting a transaction.

C) external marginal costs of the externality.

D) reason why taxes cannot affect the inefficiency resulting from an external cost.

E) external costs when a firm pollutes.

82) Which of the following is the best example of a transactions cost?

A) the value of the time spent negotiating a contract

B) the price of a new set of tires

C) the cost associated with producing a golf club

D) the price of labor and materials used to produce a house

E) the price of food

83) Three methods the government can use to cope with the external cost from pollution are

A) pollution taxes, subsidies, and outright bans.

B) pollution taxes, regulations, and subsidies.

C) marketable permits, pollution subsidies, and pollution taxes.

D) pollution charges, marketable permits, and pollution limits.

E) vouchers, pollution subsidies, and pollution taxes.

84) Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?

A) removing property rights

B) subsidizing production

C) marketable permits

D) lottery

E) vouchers

85) Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

A) 0 tons

B) 200 tons

C) 300 tons

D) more than 300 tons

E) None of the above answers is correct.

86) Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. If the government sets a pollution limit that achieves efficiency, how many tons of leather are produced?

A) 0 tons

B) 200 tons

C) 300 tons

D) more than 300 tons

E) more than 0 tons and less than 200 tons

87) Which of the following is true regarding pollution charges?

i.They force a polluter to pay a price for its pollution.

ii.They are based on the marginal external cost of pollution.

iii.The fee that produces the efficient amount of pollution is easily determined.

A) i only

B) i and ii

C) ii and iii

D) i, ii, and iii

E) i and iii

88) When using pollution charges to improve efficiency in a market with an external cost, regulators attempt to set the pollution charge equal to the

A) marginal social cost of production.

B) marginal external cost of production.

C) marginal private cost of production.

D) marginal private benefit of consumption.

E) marginal external benefit minus the marginal external cost.

89) Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

A) pollution charge; marginal social cost

B) pollution charge; marginal external cost

C) pollution tax; marginal social cost

D) pollution tax; marginal external cost

E) pollution subsidy; marginal social cost

90) In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

A) marginal private cost.

B) marginal external cost.

C) marginal social cost.

D) marginal benefit of polluting.

E) price of the good.

 

 

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